There Is Still Value In Some Small-Cap Stocks, Says Bandhan AMC's Manish Gunwani
Bandhan AMC's Manish Gunwani sees potential in select small-cap stocks over Nifty 100 due to expensive valuations.
The Nifty SmallCap 250 has surged nearly 200% in the past 12 months, but Bandhan AMC's Manish Gunwani still expects several of these stocks to have enough juice to beat the Nifty 100 index.
Around 40–50 stocks from the SmallCap index can still outperform Nifty 100, but you must find them, Manish Gunwani, equity head of Bandhan AMC, told NDTV Profit. On the other hand, large companies may struggle if global growth is slow and India grows around 6-8%.
"We will have a very selective bull market because valuations are expensive across the board, which is why I think there is more value in small caps," he said.
Among the small-cap stocks, Gunwani is bullish on power equipment, financials, and real estate.
On PSUs, Gunwani said that he is definitely overweight on some PSUs. While value is very stiff in the defence sector, old economy sectors like refining and steel have asset value, but investors need to evaluate if that can be converted to earnings and if a divestment is expected to happen at a fair value.
Among PSUs, power companies look attractive to Gunwani.
While the interim budget may look placid, it is a very brave budget, he said. "The dynamics of India's macro stability in terms of current account deficit and inflation are understated," he said, adding that the currency dynamics will attract foreign capital.
In the medium term, Gunwani expects India to continue to outperform emerging markets.