Missed the 2017 stocks rally? Buy bank, infra shares to ride the next wave, says Rs 35,000 crore investor

By: | Updated: November 27, 2017 1:17 PM

S Krishna Kumar of Sundaram Mutual Fund says that going forward, he expects infra, cement & corporate banks to lead the next market rally.

Kirshna Kumar of Sundaram MF says that cement, infrastructure and corporate bank stocks will lead the next rally. (Image: Reuters)

The stock markets have been on a roll in the year so far, with Sensex returning more than 26% in the year. However, they seem to have taken a breather, forcing many fund mangers to rejig their holdings. After global firm S&P retained India’s rating and outlook, contrary to expectations of an upgrade, the week on Monday started off on a slightly negative note with Sensex and Nifty losing nearly 0.5% each. In such a scenario, S Krishna Kumar, CIO-Equity, Sundaram Mutual Fund is looking to make certain tweaks to his portfolio. Notably, Sundaram Mutual Fund has a total AUM of Rs 35,738 crore as at the end of October-17.

In an interview to CNBC TV18, S Krishna Kumar said that going forward, he expects infra, cement & corporate banks to lead the next market rally.

“The government is definitely working on improving roadways space and other levers of growth have also been unleashed,” he pointed out in the interview. According to the expert,  the economy is growing well across multiple sectors. “The economy is leaving behind sluggishness and taking off now,” he told the channel.

Even though S&P retained India’s credit rating at BBB- the firm has taken note of India’s structural reforms. In its commentary, S&P took a favourable view of Narendra Modi administration’s economic reforms and lauded India’s fiscal consolidation drive. After upgrading India’s rating after a gap of nearly 14 years, Moody’s had said that implementation of GST, MPC, steps to address NPAs, demonetisation, DBT and Aadhaar are some of the key reforms taken by Narendra Modi government that have worked in India’s favour.

Overall sentiment also got a boost, after India Inc posted better than expected returns in the second quarter. Abhimanyu Sofat of IIFL says that the earnings momentum is likely to be better in the coming quarters. In an interview to ET Now, Abhimanyu Sofat ,VP- Research, IIFL said, “After a long time, we are going to hit double digit earnings growth. We look quite optimistic about the future in terms of earning momentum where the consumer cycle also improves with the shift from the unorganised to organised as well.”

The expert points out that a lot of companies’ profits were had taken a hit after demonetisation last year. “Post demonetisation, margins had taken a hit with lots of losses for companies across sectors. There is likely to be an expansion in the margins going forward and with the capex cycle showing early signs of reviving, earnings growth should come probably this year,” Abhimanyu Sofat explained.

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