India’s biggest festival Diwali is round the corner and everybody might be wondering to bet on a specific sector. The nation has witnessed two of its biggest economic reforms in the recent times — demonetisation and GST. Harsha Upadhyaya, CIO at Kotak AMC, said in an interview to ET Now that there would surely be some short-term frictional costs associated with them as the effect of these two reforms will be seen over a longer period. Possibly some section of the market is feeling that effect of frictional costs and hence believe that things are not normalised yet, he added.
“In our view, the consumption level in the country today… the kind of improvement in the consumer sentiment… we believe that frictional costs are short-term and will start improving,” Harsha Upadhyaya said. There will be a huge opportunity in automobiles, tractor makers and alternative fuels in the coming years, he said. As far as the financial savings are concerned equity will one of the best asset classes if the investor is making prudent asset allocation, from a long-term perspective, Upadhyaya said. We take a look at the top bets of Kotak AMC.
In the automobile sector double-digit growth has been seen on a monthly basis since last couple of months as both rural and urban economy have been delivering on the auto side, Harsha Upadhyaya said. Also, the subsegments of auto are also growing at double-digit after normalisation of the effect of demonetisation and GST. The related tractor segment is showing significant traction with two reasonably good monsoons as tractor is one of the necessities of rural economy which is required on a consistent basis, Upadhyaya added. The overall rural economy will going to prosper fuelled by the expansion in agricultural production which in turn instigate people to spend on tractors, Upadhyaya said.
Definitely, oil marketing companies seem to be in a sweet spot as earnings growth is reasonable and in line with the market. This is coupled with lower valuations than the market, Upadhyaya said. The supportive government policy and the market-related pricing and profitability will drive growth after the government moved out from pricing the products, which was a long time reform that India is looking for, he added. The government is looking for alternative fuels which are cleaner and greener in nature. All these favourable inputs from the economy will provide a subsequent rise in the demand of the natural gas in the country.