Nilesh Shah, MD and CEO of Envision Capital, says the only asset class that can outperform equities is fixed income in the next 3-6 months, more so in India if the Reserve Bank lowers rates
While it may be a little too early to take a call on whether the worst is behind us, the India story continues to remain intact, is the word coming in from Nilesh Shah, MD and CEO of Envision Capital. Though the course of the market over the next 2-3 months will be decided by global events, he says.
On the domestic front, issues such as reforms impasse and poor monsoon can play spoilsport with earnings recovery, he adds. To that extent, the rural consumption story may not kick in post monsoon. However, Shah believes that over the next 3-5 years, the Indian market will give more than 100 percent returns.
According to him, the only asset class that can outperform equities is fixed income in the next 3-6 months, more so in India if the Reserve Bank lowers rates.
He says the next leg of leadership will come from exporters, who will gain from rupee depreciation, and the domestic consumption theme. The rate sensitives and the cyclical companies with good, strong balance sheet may also provide a good buying opportunity. He also adds that the delta may be with technology stocks over the next 12-18 months.
As far as domestic cyclicals are concerned, Shah says real estate, engineering and cement are the three sectors to bet on. Though realty is the most hated sector now, in adversities lie opportunity, he says. He advises investors to look for companies with strong balance sheet, or companies with a lot of restructuring.
In the IT pack, he believes midcap IT will always throw up opportunity. However, Infosys continues to be his favourite. Shah says it has done all the right things over the past year or so. “Infosys is really preparing itself for the future,” he told CNBC-TV18.
More to follow…