Stock Market Outlook: Mihir Vora about where one finds buy-in satisfaction in a booming market
Stock Market Outlook: Mihir Vora about where one finds buy-in satisfaction in a booming market

Stock Market Outlook: Mihir Vora about where one finds buy-in satisfaction in a booming market

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Bond markets appear to be heading for lower inflation in the next two quarters. So, if this is the stance the RBI is taking, we may see a sharp rally in the next meeting, but the tail of the rallies may be a bit weak,” Mihir ForaDirector and Director of the Information Department, Max Life Insurance.

It’s been a great series and we’re starting a new series also great. The sectoral structure has gone through a 360-degree turn. The cars were working fine, but now some PSU banks have been added to this package, and even the metals for that matter are starting to come back. Where do you find buy-back buy-in, if any?
We are still going with our theme of playing the local economy because we believe that even though the Indian economy may slow down a bit in the second half, it will still be one of the fastest growing economies in the world and will still have 5-6% GDP growth as we exit the fiscal year. 23.

Therefore, to this extent, the growth pillars of domestic consumption, private sector expenditures and the making of India theme will continue to drive the local economy and thus markets and corporate profitability. So the domestic versus global sectors are still going on and within the households, we’re talking about consumer discretionary, financial benefiting from growth in credit, etc., and capital expenditures based on government and private spending.

What pocket would you like to bet on right now? The NBFCs have reported a good range of numbers, one example being the Bajaj Twins.
In the financials, a lot of pockets look good because valuations in this sector are still very reasonable compared to pre-Covid levels. Of course, the bias towards private sector banks, but there are pockets of good value even in the NBFC sector.

The main driver is that we are finally seeing a significant rebound in credit growth and suspension over the past two quarters for private sector financial institutions, we have passed the worst of the NPA issues and some cases are also seeing a rewriting of old judgments they made in anticipation of some relevant results.

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It’s two good chapters to see in terms of asset quality and credit growth anyway. Overall, it is a good college background for private sector financial institutions as well as the NBFC.

How did you read the L&T numbers? What contains the main points?
I won’t be able to comment on each company’s results individually, we’re pretty positive about the traction we’re seeing in the engineering and construction space and also in the capital goods space. Engineering construction is mainly driven by government spending and to some extent, good momentum in commercial real estate as well as a bit of corporate spending.

But mostly it is related to government spending on infrastructure, roads, etc. And as far as private sector capital is concerned, we’re seeing good pockets especially in the PLI related sectors where capital expenditures should only accelerate in the next two or three quarters.

What is the outlook when it comes to the entire consumer goods sector? How did you read into general consumption trends?
It was a mixed bag in the consumer goods space. I expect margin pressures to continue but that may or may not be reflected in stock prices as we have seen a prolonged period of underperformance in the consumer goods space. In the past three or four months, although commodity prices have increased in at least the past two months, they have stabilized and are starting to rise.

Rural demand is expected to do well, especially after the monsoon season as we enter into a busy season. While it may not be a stunning sector in terms of absolute returns, it will tend to be defensive and less volatile going forward.

Are you increasing your conviction of minerals? The cycle has already started once but is it time to bet on it again?
We are neutral about minerals. While the valuations are cheap, there is still a lot of uncertainty regarding Chinese growth. I don’t think China has announced any major stimulus measures, and it’s also going to shutdown in some cities. China is by far the largest consumer of most metals and commodities. So while the reviews are cheap, we’re not entirely sure about the strength of the pricing and future trends

Do you have a view on what could happen at the next monetary policy meeting? Do you expect this strong price cycle to continue?
We are expecting price hikes from the start. In the next policy, we expect a 35-50 basis point hike in interest rates. Equally important will be the commentary the governor makes regarding his views on inflation, whether it is consistent or not.

At least in terms of global bond markets, it appears that bond markets are beginning to fall into inflation over the next two quarters. So if this is the stance taken by the Reserve Bank of India, we could see a sharp rally in the next meeting, but the tail for the rallies could be a bit weak. This is the basic case we are dealing with.


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