There is room for more FII money to come in this year. So largecaps could do better as their relative valuations are better too, Mahesh Patil of Aditya Birla Sun Life AMC told CNBC-TV18.
Even as the market soars to fresh records, midcaps have had a forgetful 2018 so far. Key midcap indices have corrected around 1-2 percent and stocks too have taken a beating in this space.
It does raise concerns on the momentum in midcaps and whether the party is now over.
Mahesh Patil, Co-Chief Investment Officer at Aditya Birla Sun Life AMC believes there could be some volatility going forward. “Last year had very little volatility, but going forward there could be slightly higher volatile moves. The margin for error is less,” Patil told CNBC-TV18 in an interview.
He feels largecaps could be in focus as this could be a year of higher flows by foreign institutional investors (FIIs). “There is room for more FII money to come in this year. So largecaps could do better as their relative valuations are better too,” he said. Patil expects FII flows to double this year.
Here’s what his views are on different sectors.
The sector looks good, but one still needs to wait to see the growth trajectory. There are hopes for the sector based on better US business conditions, corporate tax cuts there along with increased spends by companies in US based on these cuts.
The consumption story looks fairly good, he said, adding people are expecting rural demand to improve. “Looking at the government’s focus on rural areas, this should be a strong segment for consumption to pick up." He still sees some value in consumer durable companies.
He said there are reasons to expect a turnaround in the infrastructure cycle. The sector is coming out of doldrums and the overall infra capex has been low, he highlighted.
Non-banking financial companiesLastly, NBFCs, he believes, may be looking at some consolidation and margin pressure issues as well. But in the long term, the sector still looks good to be investing in. “There are lot of areas, which are underserved and firms catering to that and not competing with banks will do well,” he told the channel.