Daily Voice | Capital goods, banking & finance may do well, IT services growth may moderate: Aurum Capital's co-founder on Q4FY23 earnings

Jiten Parmar of Aurum Capital

"We think the March FY23 quarter (Q4FY23) earnings will be a mixed bag. But we might see some improvements in next couple of quarters in some sectors like cement, chemicals, infra, to name a few," Jiten Parmar, co-founder of Aurum Capital says in an interview with Moneycontrol.

He believes capital goods and banking & finance may continue to do well, but IT services growth may moderate.

The small case manager with more than two decades of experience in the capital markets thinks for FY24, the GDP growth may be 6-7 percent. "GST numbers are robust, power demand is good, NHAI toll collection is good. We think it will be better than what the street thinks," he says.

Do you expect a pause in the interest rate hike cycle after the April policy meeting? Also, what is your forecast for the rate cut cycle?

I don’t know about the April policy, but I am pretty sure Fed will have to start reducing soon. We are already at the fag end of the rate hike cycle.

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Jiten Parmar

Co-founder|Aurum Capital

Do you think most of the negatives are fully priced in now? If yes, then is it the right time to start accumulating quality stocks, or should one wait for March quarter earnings?

We are bottom-up investors and focus on individual stocks/sectors and do not try to look for the bottom of the market. One can find stocks that are at attractive valuations with decent growth possibilities in all time durations.

During correcting markets it is slightly easier but in a bull market it becomes tough. In correcting market, can they correct more? Of course, it's possible. We have to understand that we cannot get in at the bottom.

Which are the quality themes/sectors to pick for investment now?

From a sectoral perspective, we continue to like Capital Goods, Banking & Finance, Infra, Cement, Paper, Rice, Auto/Auto Ancillaries, Chemicals, Telecom. Some of the sectors out of these are facing temporary headwinds, but if we have a long-term view, they should do well (cement, chemicals, etc.)

How do you summarise the financial year that ended on March 31, 2023, and what are the challenges and tailwinds for equities in FY24?

FY23 has been very tough for equity markets, as you can see from the returns of Nifty (-1 percent), BSE Midcap (0 percent) and BSE Smallcap (-4 percent) indices. We were lucky to be in the right sectors/stocks and our Value Investing product returned 24 percent and Cyclical Bets product returned 20 percent for the financial year.

Your thoughts on the recent Sebi meeting and announcements?

We think the regulator is doing the right things to protect the interests of the investors.

What are your broad expectations for March FY23 quarter earnings? Which are the sectors that can disappoint and surprise the street?

We think it will be a mixed bag. But we might see some improvements in the next couple of quarters in some sectors like cement, chemicals, infra, to name a few. Capital Goods, Banking & Finance may continue to do well. We believe IT services growth may moderate. It will be interesting to see the commentary on that.

Do you see any incremental dent in GDP growth from here on?

I think for FY24 we may see 6-7 percent GDP growth. GST numbers are robust, power demand is good, and NHAI toll collection is good. We think it will be better than what the street thinks.

Also remember that this is a pre-election year where the government spending could be higher than normal. This may further aid the markets.

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