COBCAM 2016: CallOut – Taking advantage of the 7 year cycle in the stock market



Excerpts from the discussion:

Mr. Jayesh Gandhi, Senior Portfolio Manager at Birla Sunlife AMC

Mr. Gandhi was firmly of the belief that equity markets world over were driven by fundamental earnings data. Although he felt a little disappointed that the euphoria over the Modi government coming into power had not translated into corporate profits, he was bullish on the prospects of the Indian economy in the next two – three years. He was of the view that valuations of Indian companies were not expensive at current levels but closer to the long term average. He felt that there was no trigger to drive prices up but expected earnings growth to pick up in the times to come. He was confident that a combination of strong political leadership, sound RBI policy measures and low commodity prices would help corporate India to overcome the lack of growth in the global economy. He was particularly overweight on sectors like Automobiles, Private Sector Banks, Oil & Gas and Media.

Ms. Shibani Kurian, VP and Head – Equity Research at Kotak AMC

Ms. Kurian said that the three things her company looks into for selecting stocks are business, management and valuation. Companies with fundamentally strong corporate earnings are relied upon more than technical indicators. While they look at both the top down and bottom up approaches before selecting a stock, compounding returns and growth in excess of the market form key indicators as well. She put her weight behind the Cement and Automobile sectors, stating that they are growing at a higher rate than the GDP. While timing the market is difficult, it is essential. With the government being able to maintain fiscal targets, monetary conditions will improve and so will corporate profitability.

Mr. Saurabh Mukherjea, CEO at Ambit Capital

Mr. Mukherjea said that the Prime Minister’s lack of tolerance for crony capitalism meant that sectors which contributed the most to the capital expenditure would not be able to do so any more. Hence, it would be unrealistic to expect the benchmark index to give ideal returns at this stage. With our Savings to GDP ratio at a 10 year low, it would also be irrational to think of a surge in consumption. The crackdown on black money means that people have had to shift from investing their money in gold and real estate to other avenues. He said that the social metrics of the country to go along with the banking system, the capital expenditure cycle and global interests were not in favor of growth in the near future. The downside risks outweigh the upsides and that not a single measure of economic activity has shown any growth in the country of late.

Mr. Supreeth Sankarghal, Hedge Fund Manager at Novo Investment Trust

Mr. Sankarghal had a bearish view of the market and said that there is no single rule of thumb in the market, but there are several variables that simultaneously play for the movement to take place. He predicted that there may be a big crash in the US markets in the near future. The major reason behind such a prediction was the declining fundamentals and poor investor confidence in stock markets. He went on to say that the economy is being run on steroids and painkillers and that the Make In India campaign is just a fairy tale. He went on to put his weight behind the Service and Consumption sectors believing them to be the bright spots in the future while being pessimistic about the Industrial sector.


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