Stock picking may not work in defense sector, which is one of his picks, but buying a basket of private and public sector players is a good idea, said the market expert
Nilesh Shah, Founder and Chief Executive Officer of Envision Capital
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The market has seen some strong moves in the last couple of months, largely in line with the global move but now its is facing some resistance. Analysts believe this is on expected lines.
“In the short term, we are likely to see some pressure. We have had quite a strong rally in the last two months, so it is quite possible that some of those gains will get shed,” Nilesh Shah, Founder and Chief Executive Officer of Envision Capital, said in an interview with CNBC TV-18 on August 23.
However, he added that the outlook for India is very strong. According to him, there are ample opportunities to invest.
“India is becoming a contrarian play globally even in terms of emerging markets,” said Shah. “A lot of stocks and sectors, especially in the broader space, are in the bull market and that is where the opportunity is. Tier-II banks, the auto component space, capex plays and defense – these are some really interesting opportunities.”
Among these stocks, many have delivered strong returns in recent months. Names such as Hindustan Aeronautics, Bharat Electronics and Bharat Dynamics have racked up impressive gains in the current year so far rising up to 110 percent.
“Defense is among the most compelling opportunities. Geopolitical environment in Europe and Asia, indigenisation, government’s resolve and reforms – taking all these things in context, defense is a space that will do very well,” Shah said.
He said stock picking may not work here but buying a basket of private and public sector players is a good idea.
Also read | Mid-cap IT stocks likely to emerge as strong performers in next 2-3 years: Envision Capital’s Nilesh Shah
Among the other stocks that have done well are from the consumption space where the worries of high raw material prices are alleviating. Though Shah believes there are very few pockets in the sectors that are attractive.
“The general consumer space is likely to underperform as some of them will have challenges in terms of growth and margins and therefore earnings. But there are two pockets that we like quite a lot in the consumption space – alcoholic beverages and snacking (biscuits and bakery),” he said.
He said he owns Radico Khaitan and United Spirits.
“Both are well poised to grow, but Radico Khaitan is currently going under huge expansion plans and this will play out in a couple of years,” he underlined.
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