Sahil Kapoor is the Head Products and Market Strategist at DSP Investment Managers
From the list of recently listed companies, there are just a few that are on track of profitability and would make sense for investment at lower valuations, Sahil Kapoor of DSP Mutual Fund says in an interview to Moneycontrol.
He, however, feels there is still valuation froth that needs to go away over the next few quarters from these new-age stocks to become attractive.
On sectors to bet on, the head of products and market strategist with more than 15 years of research experience across asset classes and businesses, says the sectors which continue to remain below pre-Covid and their historical valuations appears attractive. Healthcare, BFSI and pockets of consumption basket, defence and infrastructure offer attractive opportunities for investors, he says.
Is there any possibility of IT stocks revisiting their lows of 2022 in 2023 considering the fear of slowdown in western nations?
The recently announced quarterly results from IT majors suggests that margin pressures are abating for the IT pack. At the same time the economic slowdown in western economies is still very disjointed. The good economy has slowed and probably has already entered a recession but the services economy is still strong, though slowing.
It’s quite possible that IT stocks may continue to consolidate in a broad range and attract investors at 2022 lows. On the whole there still few quarters of consolidation and slowdown that the sector needs to see through. The correction in 2022, may have taken out the froth from the sector and the possibility of deep corrections looks lesser in 2023.
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Do you think it is the right time to bet on new age stocks that are way below their issue prices?
It is always important to invest in stocks which have sound business models and have a path to sustainable profits. The age of the stock listed on the exchange may not the best barometer to judge the businesses.
From the list of recently listed companies, there are just a few companies which have a path of profitability and would make sense as investment at lower valuations. However, there is still valuation froth that needs to go away over the next few quarters from these new age stocks to become attractive.
Is it possible for India to record strong growth in current and coming year given the global scenario?
Indian growth is likely to see a seasonal slowdown post the bumper festive season of 2022. It is also likely that some brushoff from global growth slowdown will impact Indian economic growth.
However, most economic data that we track points to steady growth in India and the impact so far appears muted and not too harsh. It is possible for India to see relatively better economic growth versus the globe with a milder impact from global linkages.
Do you think the consistent uncertainty over geopolitical issues can keep the equity market volatile in rest of financial year?
It is hard for investors to price in geopolitical risks because most of these risks are binary in nature when priced in. I would pay little attention to most geopolitical issues which do not impact financial markets directly.
However, in case of geopolitical risks morphing into military conflicts or trade conflicts, deeper analysis is need to assess the impact on financial markets. One should remain attentive of such risk but at this time we have more important sources of risk from economic growth and earnings trajectory.
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Do you think a dovish signal or commentary by the Federal Reserve and the RBI will be a big trigger for the equity market?
Inflation has been one of the core pillars which made central banks hawkish and led to interest rate tightening cycles. A reversal of this cycle would help sooth the bond markets. However markets discount the incoming data and may have already pivoted for this signal in the last few weeks.
What are the themes that you want to invest your hard-earned money in?
The sectors which continue to remain below pre-covid and their historical valuations appears attractive. Healthcare, BFSI and pockets of consumption basket, defence and infrastructure offer attractive opportunities for investors.
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