Bullish on infra, banks, automobile: Raj Bhatt, Elara Capital

In a conversation with ET Now, Raj Bhatt, CEO, Elara Capital, shares his views on the market. Excerpts:





ET Now: What is the call on the market right now? After making that all-time high, we have somewhat got into a consolidation mode. Are we at the top end of the curve for the year or do you see further gains from here too?

Raj Bhatt: The rally started before elections because people were pricing in the BJP’s victory and there were too many expectations from the government once there was a majority government and people were expecting things will turn. But everything takes time because India has running at around 5% growth rate for the last odd one year and it is going to take a lot of time before we can get the growth rate back to the trajectory of 7-8%.

That is where India should be close to 10% like China which has seen this growth rate for the last three decades. In terms of valuation, everybody thinks that is fairly valued, why should the market go up? Unless we see a major flurry of policy announcements, which will trigger earning upgrades, we do not see the market going anywhere from here. But we do not see any downside also because the optimism is still there. People are expecting that this government is going to come out with reforms, we are expecting a lot of OFS in the capital markets and globally, liquidity is not a concern.

ET Now: If the triggers are not there, what explains the underlying appetite for Indian stocks? The appetite is insatiable. Even at higher levels on a daily basis, we are getting about $80-90 million from foreign investors.

Raj Bhatt: Appetite is there, only concern is how to deploy that money. You cannot just keep buying stocks at whatever price levels. So unless we have the new opportunities, money is going to trickle in, but people will rotate between sectors and also I would suggest to be selective, invest depending on where there is more traction in terms of earnings.

ET Now: So sectorally, what is it that you are liking because there is a fair amount of chop and churn which is happening in the markets within sectors wherein sometimes you have defensives taking forward or for that matter cyclicals and how beta as well has done its bit?

Raj Bhatt: If I am a fund manager today, I would not put my money in defensives. I will slowly take cyclical bets that India growth rate is going to go up in due course and we are going to have a good cycle.

So I am going to invest in infrastructure. I am going to invest slowly in banks. I am going to invest in automobile. So these are sectors which will see up turn with the growth rate going up and we will see we have significant upside, but we need to see, of course everybody is waiting for the right policy announcements to help this growth rate to tick up from here to the level where it should be.