Even as top market voices debate whether current prime minister Narendra Modi would get a second term in Lok Sabha elections 2019 and its impact on the stock markets, Porinju Veliyath says that the question is irrelevant for long-term investors. In an interview to ET Now, Porinju noted that many investors are waiting for the election to end before taking a buying or investing decision.
“But that is not the way one should look at equity or long-term investing. It is perhaps a very good opportunity when people are talking about the election outcome and whether Modi will come back or not. That is not very relevant at this point of time for long-term investors,” he told the channel.
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Sharing his view on how 2019 will pan out after a weak 2018, Porinju noted that said that a lot of macros have turned positive now. “We had a very bad 2018. It was very painful for all kinds of investors. Those who were not affected earlier got affected in the later part of the year. That is definitely going to reverse in 2019,” he said.
Elaborating on the macros factors, Veliyath said that oil prices have reversed, the rupee and the markets have gotten steady. “There was so much exaggeration regarding the trade war, the NBFC crisis and again the so-called macro headwinds. Now things are looking better and there are reasons for the investors to cheer,” he noted.
What are his top bets for 2019? Porinju said that midcap IT stocks are slated to do well going forward. especially the midcap IT segment. Normally investors see it as a rupee trade. There has been consolidation over the last 18 years. In the previous two rallies, the IT stocks were almost ignored, even though the rally in 1999-2000 was led by IT stocks, he said. “The IT stocks now, in spite of all those apprehensions, uncertainties and grey areas, are growing at 15 to 20% if you see last five years’ CAGR. The 10-year CAGR looks better. Even earning wise, it is better than the revenue CAGR. The price earnings multiples are at historical lows,” he added.