ETMarkets Smart Talk: Nifty at record highs! Be selective while picking multibagger PSU stocks: Harish Bihani

“While several PSU companies have reported in-line to slightly better earnings, the market participants seem to be enamoured by the narrative built up in some of the names,” says Harish Bihani-EVP & Fund Manager, Kotak Mahindra AMC.

In an interview with ETMarkets, Bihani said: “A prudent and measured approach is warranted to discern between fleeting market sentiments and enduring fundamentals,” Edited excerpts:

We will be entering the last month of the current financial year. How are market is looking–so far, the story has been good. We hit fresh record highs in February 2024
Harish Bihani: The market's medium-term prospects seem promising, considering India’s current position in the business, debt, and earnings cycles.

However, a cautious tone emerges from the behavioural cycle. Specifically, the complacent posture adopted by numerous market participants is a factor that warrants attention in the near term, echoing the lessons of market history.


The tug of war continues! Can India catch up with China's weight on the MSCI index over the next 5-6 years?
Harish Bihani: India, viewed as a stock, possesses the key ingredients for lasting value creation: sustained growth, longevity of that growth, and a high return on capital.

By adhering to the current strategies and practices, there's a high probability that our overseas index weights will progressively climb over the next 5-10 years.

What do you make of the management commentary from December quarter earnings?
Harish Bihani: Management commentary displayed optimism within most capital expenditure (capex) sectors, contrasting with a more subdued tone within various consumer-facing sectors.

Emerging opportunities in numerous manufacturing sectors hold the promise of fostering job growth and creation, consequently paving the way for an eventual uplift in consumption-facing sectors in the years to come.

Sticking to the Amritkaal theme–can the financial market economy outpace the real economy – what are your views?
Harish Bihani: Market and economic growth share an intertwined relationship. Although temporary imbalances may occur, with one occasionally surpassing the other, there's an inherent tendency for both to eventually realign and reflect the underlying realities.

Nifty@22000 – what are you advising your clients?
Harish Bihani: Given the elevated valuations observed in many mid and small-cap stocks, coupled with a broad relaxation of caution among market participants, we advocate adopting a more cautious investment approach.

Emphasizing the importance of disciplined investment strategies, we recommend adhering to established asset allocation frameworks. For those considering additional investments, we suggest allocating funds incrementally, with a preference for large-cap-oriented funds.

What is going on with PSUs? Is there more steam left in this space as we have already seen the multibagger return to some of the stocks?
Harish Bihani: Market valuations reflect earnings from today multiplied by a narrative about the future. While several PSU companies have reported in-line to slightly better earnings, the market participants seem to be enamoured by the narrative built up in some of the names.

While some PSUs are reasonably valued, a few are teetering towards exuberance.

Therefore, a prudent and measured approach is warranted to discern between fleeting market sentiments and enduring fundamentals.

(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times)