- Kotak Mahindra Bank Q3 net profit marginally up at Rs 591 croreTreasury losses, fall in CE & CV loans pull down Q3 net: Kotak Mahindra Bank's Dipak GuptaOverweight rating on on Kotak Mahindra Bank, target price Rs 763, says BarclaysKotak Mahindra Bank hikes term deposit rates by 25 bps
selection of the asset class is at the behest of the customer — there’s a bend towards equity as the policyholder comes with a long-term commitment. In non-unit-linked products, since there are inherent guarantees, the equity participation is lower. Due to this divergence, growth in AUMs has been at a slower pace.
Data show insurance companies have doubled their selling in 2013 from 2012...
As I said earlier, the shift of sales from Ulips to non-unit-linked products has impacted the equity participation of insurers. Historically, the last quarter of a financial year contributes about 40% to the full year’s business. Hence, during the current quarter, insurers are expected to invest more in debt and equity.
What sectors are likely to outperform in your opinion?
At the current juncture, cyclicals are more like a contra and hope play. For them to be structural, one would like to see confirmations on the ground of the investment cycle coming back. Until that time, the preference would remain for defensives.
What is your outlook for small- and mid-caps?
If we look at the relative valuations of large caps to mid caps, there is reason to be overweight on the latter. However, for these to perform well on a sustained basis, we need to see growth coming back as well as interest rates falling. In the long run, the ability of quality mid caps to deliver higher returns is there.
What is your strategy in the current market conditions?
Currently, the equity market is hoping for a stable government at the Centre, with the policy of subsidy cuts continuing. It is very polarised in terms of sectors and, at the index levels, they look reasonably priced. The global backdrop is of an improving growth profile and flow of money, probably looking back at domestic markets rather than EMs.
We follow a bottoms-up approach to investing, which is backed by a top-down awareness. Thematically, we continue to like the outsourcing theme, which includes IT & pharma. We are neutral on domestic consumption and banking and financials. We are moderately underweight on infrastructure.