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Invest for 4-5 yrs; bullish on auto: Raamdeo Agarwal

Market veteran Raamdeo Agrawal, Joint MD, Motilal Oswal Financial Services , expects the auto pack to lead the Nifty in the coming days on the back of staggering Dhanteras sales.

“If you have 100 percent growth in a one day sale it is just a sample of things to come,” Agrawal said, adding that the numbers show that consumer confidence is coming back at least in two-wheelers. He expects it to extend to four-wheelers too.

According to Agrawal, predicting markets in the shorter run could be tough, and he feels that if one wants to really invest, he/she should do it for a longer-term, at least for the next four-and-half to five years.

Below is the transcript of Raamdeo Agrawal’s interview with CNBC-TV18’s Latha Venkatesh, Anuj Singhal and Sonia Shenoy.

Latha: As we stand on the threshold of a new year what is your best pick in the Nifty for the next one year. What might be the leader or the leaders for the Nifty?

A: All auto companies, because if you look at the Dhanteras sales they have been quite staggering I would say. If you have 100 percent growth in a one day sale it is just a sample of things to come. So, all the pent up demand and the consumer confidence is clearly visible in the demand for at least two wheelers and I am sure it is going to spread to cars and even with a little delayed kind of thing the four wheelers and trucks and other things will also pick up.

The good thing about this sector is that it is very consolidated and a lot of growth is there because penetration levels are very low. So, all of it in Nifty, whether it is Hero , Bajaj , TELCO, Mahindra ; Eicher  is not part of it. So, I would be very heavily relying on to auto as a sector.

Anuj: Since you have been tracking the market for so long last Samavat was one of the best that we have had in many years. Do you get a sense that this time we could actually better it or would this year be more about consolidation as far as the index level is concerned?

A: There is expectation since earnings growth is picking up and still the buoyant mood and Modi wave is still very strong and now Mr Jaitley has also come back from the hospital looks very thin, handsome and energetic. So far you had only Modi wave, now you will have Mr Jaitley wave also. So, a combination of these two could be big at least till the Budget and then we will see the Budget and what happens but I would be surprised if you don’t make about 15-20 percent but predicting markets in the shorter run is tough but if you want to really invest you should invest for the next four and half to five years at least till Mr Modi’s last year comes because at that time the economy will be in the pinkest of the health hopefully.

Sonia: For a retail investor this has been one of the best years. We have heard a lot of comments in this year, something that we haven’t heard for a long time in terms of positive sentiment. Do you think equities will outperform all other asset classes, be it gold, real estate, at least for the next three to five years?

A: It looks like because last five years has been very flat and if you look at gold it has been dead and out and in any case it was not a big asset class per se. The real competition is in the fixed income and real estate. I don’t know much about real estate but people are stuck with no liquidity and still there is no panic in the real estate market but there is no liquidity, no exit from the market. So, forget about old money but new money is not going to flow there in a big way.

So I would think that as the interest rate cycle goes down and the attraction for equities will become even better and hopefully Raghuram Rajan is going to come here to fight the inflation once and for all and he wants to see inflation dead and out. So, in a world which is full of deflation if we have a low inflation of 3-4 percent instead of 7-8 percent equity will be one way.

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