Anand Varadarajan of Asit C Mehta Financial Services
Anand Varadarajan, director, Asit C Mehta Financial Services, goes where most investors fear to tread. You won’t find many analysts batting for the much-derided public sector undertakings but for him, some of these enterprises are an attractive investment opportunity.
The financial service professional with more than 20 years of experience says the PSU sector is underrated and thinks defence, power and railway infra are a good bet.
In an interview to Moneycontrol, Varadarajan says the market has factored in rising interest rates, inflation and geopolitical tensions and India’s on track to be a $ 10-trillion economy over the next few years. Edited excerpts:
Why are you bullish on public sector enterprises which hardly find takers among investors?
We believe that the PSU (public sector undertaking) segment is really underrated. While we understand and appreciate that this sector hasn’t been very sought after, we believe that there are a lot of companies which are below the market radar.
For example, we as a part of our “scientific investment” framework have identified growth vectors such as defence, power, and bullet train/railway infra, where there are several PSUs which are available at attractive valuations.
While people may not agree, these are fantastic investment opportunities and companies (are) delivering consistent growth and profitability and (are) sitting on cash.
Also read: Eight of top 10 firms add Rs 2 lakh crore to market valuation; Reliance leads gainers
Do you believe that India will become a $ 10-trillion economy in 10 years from now?
Yes, we strongly believe that there is a significant opportunity by looking at how the economy has grown over the past 32-plus years.
With a stable and pro-growth policy regime at the Centre, India is now on its path to becoming one of the leading economies of the world due to inherent growth factors such as a large working-age population, strong free market economy characteristics, strong legal framework, availability of capital, massive engineering and management talent and training infrastructure, strong research and development capabilities, large and growing consumer base, strong agricultural, manufacturing and services ecosystem and growing exports and Make In India, China plus one, etc
Do you expect the Nifty to be in the 20,000-22,000 by Diwali 2023?
Yes, definitely, looking at the bullish sentiments towards India’s growth and also domestic inflows getting stronger, the Nifty is likely to trade beyond this range in Samvat 2079.
Though there are challenges to the global economy, particularly in the West, there is a strong likelihood considering that global investors continue to find India attractive.
The initiatives mentioned above are going to further galvanise this movement. Having said this, there could be periods where markets can be moving sideways and investors should believe in equity and stay invested for the long run.
Also read: FPIs sell Indian equities worth Rs 6,000 crore in October on strengthening dollar
Do you see a good rally in a realty sector that has seen a multi-year slump?
We believe that there could be a revival in light of the time correction in this sector. Consumer discretionary spending is strengthening and real estate could benefit from this.
However, the sector continues to face liquidity challenges and hence, investors should focus on having a balanced asset allocation approach instead of going after real estate.
Also read: Indian markets on track to outsmart global peers in Samvat 2079
Do you think banks, capital goods and manufacturing sectors are likely to outperform the market in Samvat 2079?
Yes, digital transformation, defence, power or electrification, capital enablers that encompass financial companies and the electric vehicle segment will see a good uptake. These growth vectors would have the above sectors in question, which would have significant growth opportunities.
Is the market still worried about rising interest rates, inflation and geopolitical tensions?
The market has already factored in these worries, at least as of now. The long-term view remains quite opportunistic. However, there are going to be scenarios in between where we could see the momentary impact of such factors at play.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
