The bullish sentiment of the past one month and an easing foreign investor selloff makes the current landscape a "merry rally", according to veteran fund manager Mahesh Patil.
The market clearly has bottomed out and the sentiment looks fairly reasonable from a near- to medium-term perspective even if earnings growth stays muted at around 13–14% this year, the chief investment officer of Aditya Birla Sun Life Asset Management Co. told BQ Prime's Niraj Shah in an interview. "India's growth differential looks much better than other developing markets."
India's benchmark Nifty 50 has rebounded nearly 8% from its April low even as fears of a recession in the U.S., the world's largest economy, persist.
Patil said the market breadth has improved recently too. Still, he is apprehensive of the volatility that can seep in on account of the general election due next year.
Key Themes
Patil expects non-banking finance companies to perform better than last year as the rates have peaked out, given the expansion in the banking and financial services sector.
He sees rural demand rising around elections and making "consumption" a lucrative theme. He favours discretionary consumption from a three-year perspective.
Pharmaceutical and healthcare would act as good defensives as the generics market in the U.S. undergoes consolidation and price correction in terms of exports, he said. The domestic growth of pharma has been stable too.
Industrials and capital goods look attractive as well, according to him, even though the valuations may seem expensive at present.
Watch the full interview here:
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