In an interview with ETMarkets, Khemka said: “One could allocate higher capital to relatively smaller companies which are reasonably valued and would likely participate meaningfully in the Indian growth story,” Edited excerpts:
A near 6% fall in the market post the election outcome, and then a bounce back in the following session. What is D-Street factoring?
A continuation of a stable government and policymaking is mostly positive for business and the economy.
Due to the election outcome on Tuesday, we believe that the ability of the Government to make significant reforms could be reduced somewhat. This could be a cause of worry for investors.How are FIIs likely to approach D-Street amid political uncertainty? The valuation premium was on stable fundamentals but the new govt might come with a different agenda. What are your views?
Global investors haven’t got much choice but to remain invested in India and perhaps increase allocations despite the political uncertainty.
India is the fastest-growing large economy today and is likely to remain so in the foreseeable future.
The valuation premium had run up beyond rational levels and hence some correction in valuations in the near term cannot be ruled out.
Which could turn out to be a dark horse in FY25?
Healthcare as a sector could turn out to be the dark horse in FY25. We believe Healthcare is largely non discretionary consumption and the margins for the sector were suppressed in the past due to raw material inflation. As the raw material prices come off, the sector could outperform others.
Is there a need to shuffle the portfolio amid political/reform uncertainty?
Most of the front-line stocks are fairly valued today and offer limited upside from current levels in the near future.
Hence, one could allocate higher capital to relatively smaller companies which are reasonably valued and would likely participate meaningfully in the Indian growth story.
Many new investors are joining D-Street every month. Now, if someone wants to start their investment journey in 2024 – how are the next 5 years looking?
Indian economy should grow in double digits (early to mid-teens) in nominal terms for the next 5 years. Hence, an investor could expect similar returns from his portfolio.
Do you think there is going to be a complete reset of the policy initiatives?
No. We believe that the Indian political environment will be stable and hence there may not be a reset in policy making.
With election uncertainty out of the way – is there anything that could derail a rally on D-Street in FY25?
There are multiple geopolitical uncertainties. Any implosion/explosion on the geo-political front could be a negative surprise for the markets. Further, higher inflation in commodities and food could be a negative for Indian markets.
(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)
