stock market outlook: ETMarkets Smart Talk: Banks, defence, real estate, cement top sectors to benefit from economic expansion: Dr. Poonam Tandon

“We stay obese on sectors that may profit from financial enlargement reminiscent of banks, industrials, utilities, defence, actual property, and cement,” says Dr. Poonam Tandon, Chief Funding Officer at IndiaFirst Life.

In an interview with ETMarkets, Tandon stated: “We’re very constructive on the infrastructure and actual property cycle because the sector will proceed to profit with the federal government allocating increased budgets and providing numerous incentives” Edited excerpts:

October is popping out to be a curler coaster trip for buyers in fairness markets. Will geopolitical issues have a long-term impression on fairness markets if issues escalate?Geopolitical strain is on the rise amid the continued conflict between Russia and Ukraine and now the Israel-Palestine battle.

The geopolitical danger threatens monetary stability, world commerce, and cross-border capital flows because of elevated danger aversion amongst buyers.

In addition to, it’s going to additionally impression the commodity markets when it comes to increased inflation. We really feel that geopolitical ramifications are essential and sophisticated as properly to know as it may possibly result in plenty of volatility within the close to time period however in the long term geopolitical occasions usually don’t have a long-lasting impression on the markets.

Greater than 40 corporations have introduced their buyback cumulatively placing over Rs 30,000 cr on supply. TCS is the most recent one. Why are buybacks turning into frequent — or is it a technique of hiding dangerous information, if any?In the previous few years many corporations have been saying share buybacks, particularly corporations from the IT sector.

One of many key causes is much less funding alternatives and an excessive amount of money on the stability sheet. Many of the corporations within the IT sector are mature companies and do not need newer areas to put money into.As well as, buybacks are tax-efficient technique of rewarding buyers over dividend payouts. We see the announcement of the buyback program as constructive and never as a instrument to cover any dangerous information given it is without doubt one of the methods to reward shareholders.Do you see any long-term implications on the commodity cycle because of geopolitical issues?The geopolitical issues in the long term are transmitted by the actual economic system and the impact of disruptions will probably be seen each within the monetary and commodity markets.

Growing geopolitical danger will result in increased commodity costs, particularly for delicate commodities reminiscent of crude oil and gold.

After the pandemic, the provision chain disruptions additional escalated on account of the Russia-Ukraine conflict as each these international locations are main producers and exporters of crude oil, fuel, wheat and aluminium.

Now the battle has emerged within the Center East which is a delicate area for crude oil costs. The state of affairs could be very fluid, and any escalation of conflict can result in main interruption to the oil provide and in flip, impression the inflation and shopper sentiments.

SIP of greater than Rs 16000 cr or $2 bn – does this excite you? That is excellent news for the MF trade in addition to for fairness markets. However as extra schemes get launched each month — buyers will solely get confused. How ought to one do fund choice?Sure, SIP flows proceed to be robust regardless of world headwinds because the home economic system is displaying resilience. We’re additionally seeing extra NFOs being launched, particularly in multi-cap, small-cap, and thematic area to plug in any hole within the product choices.

An investor ought to take into account numerous elements for choosing a fund reminiscent of fund supervisor expertise, efficiency historical past, expense ratio, kind of scheme, property below administration and funding goal.

In addition to, buyers also needs to take note of the time horizon & danger tolerance and choose the fund class accordingly as markets could be very risky within the brief time period.

What are your expectations from September quarter earnings?We count on the September quarter earnings to be constructive with Banks benefiting from robust mortgage development and decrease provisioning value regardless of NIM strain, the Auto sector reporting YoY development because of higher volumes and costs and capital items area is predicted to report robust execution and margin enchancment.

Furthermore, cement is prone to report robust quantity development and margin enchancment whereas margins of commodity corporations are anticipated to enhance.

On the adverse aspect, IT is predicted to report muted numbers, nonetheless, the demand commentary will probably be essential.

The FMCG sector can also be prone to report low single-digit quantity development. General, for this quarter we count on quantity development to stay robust throughout home sectors and margin to enhance as a result of fall in uncooked materials costs.

Are PSU the best place to be in – as inflation stays excessive and the market strikes from development shares to worth shares?Historically, PSU shares have been underperforming for a protracted interval and have been buying and selling under their intrinsic worth regardless of dominant market share in lots of sectors – banks, defence, and commodities.

With NPA points behind us, PSU banks are trying engaging given the stability sheet cleanup, defence area is gaining traction on a renewed concentrate on home manufacturing and commodity sector to profit from an inflationary surroundings. So, a mixture of bettering fundamentals and low-cost valuations has purchased buyers’ curiosity again on this area. We proceed to remain constructive on PSU corporations as valuations are comparatively nonetheless engaging.

How are you positioned for the remainder of the yr? The place is wise cash shifting?We proceed to remain constructive on the home funding theme over the consumption theme led by financial restoration and continued concentrate on indigenisation.

We stay obese on sectors that may profit from financial enlargement reminiscent of banks, industrials, utilities, defence, actual property, and cement.

With the World Cup on everybody’s thoughts — which sector/inventory may very well be the captain or Rohit Sharma of the portfolio? We’re very constructive concerning the infrastructure and actual property cycle because the sector will proceed to profit with the federal government allocating increased budgets and providing numerous incentives.

As well as, growing curiosity from world corporations to arrange manufacturing amenities in India with the intention to diversify their provide chain from China can also be constructive for this area.

(Disclaimer: Suggestions, strategies, views, and opinions given by consultants are their very own. These don’t characterize the views of the Financial Instances)