February 2024

Neelkanth Mishra, Chief Economist at Axis Bank and Head of Global Research at Axis Capital, shares insights on key investment themes during a recent discussion with CNBC TV18, highlighting defense, electronics, and financial sectors as prime areas for investment.

Post-Pandemic Recovery and Growth Drivers:

Mishra notes the gradual alignment of investments with pre-pandemic levels, signaling a potential shift in growth drivers. Panels at the Axis Capital India conference explore emerging sectors like new energy and electric vehicles, reflecting growing curiosity about future growth opportunities.

Optimistic Outlook for the Indian Economy:

Mishra expresses optimism about the Indian economy’s outperformance compared to the global scenario. He emphasizes the potential of domestic cyclicals to perform well in the coming months, despite near-term uncertainties such as monetary tightening and global growth concerns.

Also Read:

• Potential of AI in Financial Advising
• Decoding Devina Mehra’s Market Outlook
• Embracing Positivity in the PSU Banks

Axis Capital Sees Opportunities in the Banking Sector:

Mishra identifies the banking sector as oversold, citing concerns about liquidity tightness and its impact on credit growth. However, he expresses confidence in the sector’s resilience and hints at potential pricing discipline among banks as credit demand remains strong.

Impact of Government Spending on Various Sectors:

Mishra acknowledges a moderation in government spending, particularly in areas like railways and urban infrastructure. However, he downplays the significance of government spending as the sole driver of industrial growth, emphasizing the increasing role of private sector investment.

Shift Towards Private Sector-Led Growth:

Looking ahead, Mishra predicts a rise in private sector capital expenditure, particularly in sectors like utilities, materials, and energy. He anticipates a shift towards private sector-driven growth in industrial investments, signaling a positive trajectory for economic expansion.

Conclusion:

Axis Capital’s insights highlight promising investment avenues amidst evolving market dynamics. Investors can capitalize on opportunities in defense, electronics, and financial sectors, aligning their strategies with emerging themes to navigate potential challenges in the economic landscape.

In a recent interview on ET Now‘s “Beat The Street,” Devina Mehra, Chairperson and Chief Investment Strategist at First Global, shared insights into the current market landscape and her outlook for investors. Mehra’s analysis offers valuable guidance for navigating the complexities of the market amid various economic and geopolitical factors.

Devina Mehra’s Perspective on Market Positioning:

Despite India’s impressive performance in recent times, Mehra emphasizes that foreign institutional investor (FII) flows do not significantly influence the market’s trajectory. She asserts that the risk of a major market crash is low, attributing this assessment to India’s historical underperformance in the past decade. Mehra notes that the market is not significantly above the trend line, reducing the likelihood of a severe downturn. While short-term corrections may occur, she maintains a positive long-term outlook for the market.

Investment Strategy and Portfolio Allocation:

Devina Mehra advocates for a cautious approach, particularly regarding small caps, micro-caps, and IPOs, which represent higher-risk segments of the market. She suggests selective investments within mainstream industries, advising against a blanket approach. Notably, Mehra highlights an overweight position on India in their global portfolios, indicating confidence in its growth prospects. However, she advises against holding excessive cash, as missing out on potential market gains outweighs the risks associated with being fully invested.

Also Read:

• Embracing Positivity in the PSU Banks
• Insights from Quantum Advisors
• Axis Capital Identifies Defense, Electronics, and Financials

Caution on Banks and Sector Selection:

One notable aspect of Mehra’s outlook is her skepticism towards the banking sector. She points out that banks have underperformed in three of the last four years, citing concerns about credit quality and negative surprises. Mehra’s preference for PSU banks over private sector banks underscores her cautious stance on the sector as a whole. She stresses the importance of thorough analysis when selecting individual stocks, emphasizing the need to carefully assess moving parts and expectations.

Monitoring Trend Lines and PSU Stocks:

Devina Mehra advises investors to monitor trend lines closely and exercise caution with PSU stocks, which have seen significant momentum but may carry inherent risks. While acknowledging their recent surge, Mehra reminds investors of the cyclical nature of markets and the potential for reversals. She urges investors to evaluate each PSU stock individually, considering factors such as fundamentals and market expectations.

Key Takeaways:

Devina Mehra’s insights offer valuable guidance for investors navigating the current market environment. Her emphasis on cautious optimism, selective investment strategies, and careful sector allocation provides a roadmap for building resilient portfolios. By staying informed, monitoring trends, and conducting a thorough analysis, investors can navigate market fluctuations with confidence.

In conclusion, Devina Mehra’s outlook underscores the importance of prudence and discernment in today’s dynamic market landscape. By aligning investment decisions with a well-informed strategy, investors can mitigate risks and capitalize on emerging opportunities, ultimately achieving long-term financial objectives.

Explore Vikas Khemani’s outlook on PSU Banks. Gain valuable insights into investment strategies and market trends.

In a recent interview with CNBC TV18, Vikas Khemani, the founder of Carnelian Asset Management and Advisors, shared his perspective on the current state of the PSU banking sector and his outlook on new-age companies. Khemani highlighted the resilience and potential within PSU banks, particularly Punjab National Bank (PNB), and offered insights into the evolving landscape of the financial sector.

Positive Outlook on PSU Banks

Despite recent fluctuations in PSU bank stocks, Khemani remains optimistic about their future performance. He attributes this confidence to the ongoing structural reforms and improvements in governance, technology, and asset quality within the sector. According to Khemani, PSU banks have addressed significant issues that previously hindered their growth, such as governance shortcomings and technological deficiencies. With enhanced governance practices, robust technological platforms, and improved asset quality, PSU banks are poised for continued success.

Khemani emphasized the narrowing gap between PSU and private banks, particularly in terms of asset quality, governance, and technology adoption. He believes that as perceptions around PSU governance continue to evolve positively, these banks will gradually realign their valuations with those of their private counterparts. This alignment is expected to be supported by sustained improvements in operational efficiency and profitability across the sector.

Also Read:

• Devina Mehra’s Market Outlook: Caution on Banks
• Insights from Quantum Advisors
• Unlocking India’s Energy Sector Potential

Investment Strategy and Portfolio Considerations

Regarding specific investments, Khemani discussed the case of Laurus Labs, acknowledging its recent challenges but maintaining a long-term perspective on its potential as a player in the Contract Development and Manufacturing Organization (CDMO) segment. He highlighted the cyclicality of the CDMO business and emphasized the importance of understanding and navigating through quarterly fluctuations in performance.

Assessment of New-Age Companies

In contrast to the enthusiasm surrounding new-age companies, Khemani advised against blanket investments in this space. He cautioned against the indiscriminate purchase of stocks based solely on trends, emphasizing the importance of analyzing individual business models, management quality, and growth prospects. While acknowledging the potential of disruptive technologies, Khemani stressed the need for a discerning approach to investment in this sector.

Regarding new-age companies, Khemani expressed reservations about their valuation levels, particularly in the case of Zomato. Despite Zomato’s recent profitability and market positioning, Khemani questioned the sustainability of its valuation metrics. He highlighted concerns about the long-term viability of the company’s business model, particularly in light of evolving market dynamics and competitive pressures.

In conclusion, Khemani underscored the importance of thorough research and selective investment strategies in navigating the complexities of both traditional and emerging sectors. He encouraged investors to prioritize fundamental analysis and long-term growth potential over short-term market trends.

Conclusion

Vikas Khemani’s insights shed light on the evolving dynamics of the banking sector and the nuanced approach required for successful investment in today’s market environment. As investors navigate through market uncertainties, Khemani’s perspective serves as a valuable guide for identifying opportunities and mitigating risks in both established and emerging sectors.

Disclaimer: The investment recommendations discussed in this article are based on Vikas Khemani’s insights, and readers are encouraged to conduct their due diligence before making any investment decisions.

In a recent interview with CNBC TV18, Nilesh Shetty of Quantum Advisors shared valuable insights into the current state of the market and offered advice for investors navigating through the choppy waters. With frontline indices maintaining stability while the Midcap Index experiences significant fluctuations, Shetty urges caution among investors, particularly highlighting concerns over stretched valuations in the PSU basket.

Market Evaluation and Investor Strategy:

Shetty begins by acknowledging the market’s choppy performance post-budget and emphasizes the difficulty in finding value across the board. Drawing parallels to the market conditions seen in 2006-07, he suggests that securing double-digit returns from current levels seems challenging. Hence, he advises investors to exercise caution, especially if they’ve realized significant profits or have over-allocated their portfolios. Quantum Advisors recommends a conservative approach, suggesting investors allocate only a small portion of their funds at present, with the potential for further allocation if the market offers more favorable opportunities in the future.

Assessment of Platform Companies:

Regarding platform companies like Zomato, Shetty refrains from commenting on specific stocks but highlights the broader trend of transitioning from loss-making to profit-making. However, he stresses the necessity for these companies to substantially improve profitability and cash flows to justify their valuations adequately. Quantum Advisors has not allocated funds to this sector due to concerns about over-optimistic projections required to justify valuations.

Also Read:

• Unlocking India’s Energy Sector Potential
• Vikas Khemani Found Positivity in the PSU Banks
• Morgan Stanley’s Jonathan Garner

Analysis of PSU Sector Performance:

Shetty expresses perplexity over the surge in the PSU sector, followed by a subsequent downturn. Despite initial investments in PSU companies several years ago, Quantum Advisors has gradually trimmed its positions due to concerns over inefficiency, poor governance, and inadequate capital allocation. Shetty warns investors to exercise caution, as many PSU stocks now appear overvalued compared to their private sector counterparts.

Conclusion of Insights from Quantum Advisors:

In conclusion, Nilesh Shetty’s insights underscore the importance of vigilance and strategic planning in today’s volatile market conditions. As investors navigate through uncertain times, Quantum Advisors advocates for a prudent and selective approach to portfolio management. By heeding such advice and staying informed, investors can better position themselves to weather market fluctuations and achieve their long-term financial goals.

Unlock India’s energy potential with insights from SBI MF experts. Explore opportunities and risks in the dynamic energy sector.

Introduction:

In a dynamic world where energy transition is at the forefront of global discussions, India stands poised for significant advancements in its energy landscape. Recently, CNBC TV18 hosted a compelling discussion featuring Raj Gandhi, Fund Manager, and Ruchit Mehta, Head of Research from SBI Mutual Fund, shedding light on India’s promising energy future. Let’s delve into the key takeaways from their insightful dialogue.

The Regulatory Landscape:

Raj Gandhi pointed out that the energy sector, being pivotal for national security, is subject to regulatory oversight. However, he highlighted India’s shift towards investment-driven subsidies, such as incentivizing solar panel installations and allocating funds for hydrogen sector development. Although regulatory risks persist, this move signifies a positive policy shift towards sustainable energy sources.

Bottom-Up Reforms:

Ruchit Mehta emphasized the transformative reforms undertaken to mitigate systemic risks in the energy sector. From curbing kerosene subsidies to digitizing LPG connections, these measures have minimized leakages and enhanced efficiency. Additionally, blending ethanol in petrol and doubling railway electrification underscore India’s strides towards self-sufficiency and sustainability.

Economic and Political Implications:

The transition to renewable energy not only bolsters the economy but also garners political favor. Ruchit Mehta highlighted the economic boost stemming from local energy production, which translates into profits for the populace. Furthermore, initiatives like controlling flooding through hydroelectric projects garner public support, making the energy transition a win-win scenario economically and politically.

Also Read:

• Insights from Quantum Advisors
• Morgan Stanley’s Jonathan Garner
• Shankar Sharma’s Insights on Small Caps

India’s Global Leadership Potential:

Raj Gandhi emphasized India’s capacity to emerge as a global player in renewable energy, particularly in solar and hydrogen technologies. By leveraging solar energy for green hydrogen production, India can establish itself as a key player in the international energy market. Moreover, investments across traditional energy companies in hydrogen technology signal a strategic shift towards cleaner fuel alternatives.

SBI MF Energy Fund:

Amidst a cluttered market, SBI Mutual Fund’s energy-focused offering stands out as a dedicated avenue for investors seeking exposure to the energy sector. Raj Gandhi highlighted the fund’s uniqueness in focusing solely on energy, offering investors a distinct opportunity to capitalize on India’s energy transition.

Conclusion:

In conclusion, India’s energy landscape presents many opportunities amidst evolving regulatory frameworks and transformative reforms. With a strategic focus on renewable energy and sustainable practices, India is poised to lead the global energy transition. Investors keen on tapping into this burgeoning sector can explore avenues like SBI MF’s Energy Fund for long-term growth potential and favorable valuations.

Closing Remarks on Energy Sector Potential

As the dialogue concludes, the experts echo the sentiment of a promising future fueled by sustainable energy practices and favorable market conditions. With India’s commitment to renewable energy, coupled with prudent investments and policy reforms, the energy sector offers an enticing prospect for investors seeking growth and sustainability in tandem.

In a recent discussion hosted by Beat The Street on ET Now, Jonathan Garner, Chief Asia EM Equity Strategist at Morgan Stanley, provided valuable insights into the state of emerging markets (EM), with a particular focus on India amidst global economic dynamics. Garner, who holds a bullish stance on India within the EM space, highlighted several key points regarding the investment landscape.

Morgan Stanley has Firm Conviction in India Amidst Caution in EM

Garner reiterated Morgan Stanley’s strong conviction in India, which stands as their largest overweight position, alongside Japan, in the Pan Asia EM investor portfolio. Despite this, he expressed caution regarding the broader EM pack for the first half of the year. The strengthening dollar and the Federal Reserve’s reluctance to implement rate cuts contribute to a high-cost capital environment. At the same time, China’s struggles add to the complexity of the EM investment landscape. Garner emphasized the importance of discerning investment opportunities within EM, with India being a standout choice.

Delayed Rate Cuts and Impact on the Dollar Index

Garner’s long-standing view suggests that the first rate cut by the Federal Reserve may occur in June, with a gradual reduction thereafter. This cautious approach aims to balance the need for monetary easing with sustained economic growth. While the US economy continues to perform well, countries like India are better positioned to withstand dollar strength due to robust economic fundamentals.

Valuation and Market Triggers in India

Despite not being cheap by traditional metrics, India’s market valuations reflect the country’s strong earnings environment. Jonathan Garner acknowledged that while the upside potential may not be as significant as in previous periods, India remains an attractive investment destination, especially compared to other EMs. He pointed out that sectors like financials and consumer discretionary, along with property, present promising opportunities for investors.

Also Read:

• Unlocking India’s Energy Sector Potential
• Shankar Sharma’s Insights on Small Caps
• Aveek Mitra’s Insights

Japan’s Strong Performance and Global Investor Interest

Garner highlighted Japan’s resurgence, marked by significant inflows and impressive earnings growth. While Japan’s success does not necessarily divert funds from other EMs like India, it does reflect a broader trend of global investor interest diversifying across different regions. India’s growing market cap within the EM universe underscores its attractiveness to investors.

Incremental Reforms in India and Foreign Investor Sentiment

Looking ahead, Garner emphasized the importance of continuity in India’s reform agenda, maintaining fiscal discipline, encouraging private investment, and remaining open to foreign capital inflows. He noted that incremental reforms, rather than radical changes, are likely to sustain investor confidence and drive economic growth.

Investor Preference for Large Caps in India

Jonathan Garner addressed investor sentiment regarding large-cap versus mid-cap stocks in India. While some investors may gravitate towards mid and small-caps over time, most institutional investors focus on larger-cap stocks represented in indices like MSCI India. Despite variations in performance between large and mid-cap segments, the overall sentiment towards Indian equities remains positive.

Steady Pace of Flows Expected for Indian Equities

Regarding the influx of funds into Indian equities, Jonathan Garner anticipates a steady pace of flows despite potential volatility surrounding the upcoming elections and global economic uncertainties. He emphasized India’s resilience and recommended maintaining or increasing exposure to the Indian market.

In conclusion, Garner’s insights offer a comprehensive understanding of the current investment landscape, emphasizing India’s resilience and attractiveness amidst global economic dynamics. As investors navigate uncertainties, India stands out as a promising destination for long-term growth and investment opportunities.

In a recent discussion on BTTV, Shankar Sharma, the Founder of GQuant, shared valuable insights into the burgeoning potential of small-cap stocks in the Indian market landscape. Sharma’s expertise, built over three decades of navigating Dalal Street, offers a compelling narrative on why small caps are becoming the focal point for investors seeking growth opportunities.

Shankar Sharma’s Insights on Small Caps: The Rising Stars

Sharma highlights a significant paradigm shift where small-cap stocks have emerged as the primary game-changer, outpacing their large-cap counterparts. This departure from historical trends underscores the evolving dynamics within India’s economic landscape. According to Sharma, the growth trajectory of large caps seems to be reaching a saturation point, as reflected in their limited capacity to drive substantial returns. In contrast, small caps present a fertile ground for investment, with untapped potential and room for exponential growth.

Navigating the Market Terrain

During the conversation, Shankar Sharma shares his top picks in the small-cap space, including Thomas Scott, Valiant Communications, Sumit Woods, and Rama Steels. These companies, characterized by their innovative approaches and promising technologies, represent the vanguard of India’s small-cap resurgence. Sharma’s strategic investment approach underscores the importance of identifying disruptive technologies and emerging trends to capitalize on market opportunities effectively.

Paytm Crisis and Regulatory Actions

Addressing the ongoing Paytm Crisis following RBI’s regulatory actions, Shankar Sharma emphasizes the importance of regulatory compliance and robust governance frameworks for startups operating in highly regulated industries. While acknowledging RBI’s role as a reputable regulator, Sharma suggests that startups, including Paytm, need to focus on building resilient systems and processes to sustain long-term growth.

Also Read:

• Morgan Stanley Insights on EMs and India
• Aveek Mitra’s Insights
• BNP Paribas Highlights Financial Sector Priorities

The Road Ahead

Shankar Sharma’s insights shed light on the transformative potential of small-cap stocks in reshaping India’s investment landscape. As investors navigate through dynamic market conditions, Sharma’s perspective serves as a guiding beacon, emphasizing the significance of agility, innovation, and prudent risk management strategies. In an era marked by rapid technological advancements and regulatory scrutiny, unlocking the potential of small caps could be the key to unlocking sustainable value creation in the Indian markets.

Conclusion

In summary, Shankar Sharma’s insights offer a compelling narrative on the evolving dynamics of the Indian market, with small-cap stocks emerging as the vanguard of growth and innovation. As investors seek to capitalize on emerging opportunities, understanding the nuanced trends and disruptive forces shaping the market becomes imperative. Through strategic investment approaches and astute market analysis, investors can harness the transformative potential of small caps, paving the way for sustained wealth creation in India’s vibrant investment landscape.

Disclaimer: The investment recommendations discussed in this article are based on Shankar Sharma’s insights, and readers are encouraged to conduct their due diligence before making any investment decisions.