Harish Krishnan, Sr. VP & Equity Fund Manager Kotak Mutual Fund says market is at an interesting juncture – on one hand the country is going through big reforms on ground, as well as interest rates are getting transmitted to the real economy while on the other hand valuations look stretched.
He said in terms of positioning in sectors and stocks they would look at spaces where supply is restricted or limited to few players. Because India is a country where there is under penetrations in most things and there is huge pent up demand. Therefore when demand increases, few players will benefit.
For example, he said with the 7th Pay Commission coming in it would put more disposable income in the hands of people and could likely benefit the car and consumer durable spaces, where the penetration levels are very low. Moreover, the car industry is already consolidate with no likely new players entering the fray, he said in an interview, to CNBC-TV18.
So the current players will benefit when demand goes up. There is very low competitive pressure and premiumisation happening in the auto space, said Krishnan.
So the house remains constructive on autos, said Krishnan.
The house is and has been over weight on cement, said Krishnan because it is likely to benefit from consolidation in the sector, government spending, and demand revival. So, look for companies that have invested ahead of their time and have room to expand their capacities when demand increases, he said. The house has been upbeat on UltraTech Cement and Shree Cement.
However, the house is underweight on the information technology space as a whole but continue to have some exposure in few name.