Even as we come to the end of calendar year 2017, in what has been an excellent year for the equity markets with the Sensex returning more than 24% in the year so far, Harsha Upadhyaya of Kotak Mutual Fund says that the trend of double digit earnings growth will continue for the next few quarters. “We have seen a bit of that in the September quarter where for the first time after several quarters, we saw double digit earnings growth on a year-on-year basis and also there was a sequential improvement in terms of earnings numbers. We believe that that trend will continue into December and March quarter and even into the next financial year and that is what will keep the markets on a stronger footing,” Harsha Upadhyaya told ET Now.
Yesterday, Jonathan Garner of Morgan Stanley said that he see better earnings growth acceleration in 2018. “The Indian markets have been different from other emerging markets. Growth has been quite choppy in India in the past 12 months. We should see earings grow at 12% year on year, as the impact of GST and demonetisation is behind us,” Jonathan Garner, Chief Asia & EM Equity Strategist at Morgan Stanley told CNBC TV18.
Harsha Upadhyaya said that infrastructure sector offers an attractive opportunity for investors. “We have already seen improved order flows. As we head into 2018 and beyond, we will start seeing improved visibility in terms of execution of those orders which will definitely improve their financials both from top line and bottom line perspective. Anything linked to infrastructure is worth looking at,” he said. Apart from infrastructure, the expert also advised investors to look at stocks related to the rural economy.
“Given that the government will continue to focus its energy on reviving rural economy and improving agriculture, that is another theme which will show a lot of gains during the next few years. Anything that is linked to rural economy — whether it is consumer discretionary which is rural dependent or any of the agri stocks including fertilisers, irrigation stocks, pipe manufacturers, etc, — all are likely to see reasonably strong demand coming in over the next few years,” Harsha Upadhyaya told ET Now.
Harsha Upadhyaya also shared his outlook in the IT sector. “One needs to be stock specific in IT sector. I do not think sector as a whole is likely to outperform the overall market but there could be players who will see better growth rates compared to their history, immediate history or even market at some level. Those will be the stocks that one needs to buy into but overall the headwind still continues,” he said in the same interview.