According to Sandip Sabharwal, asksandipsabharwal.com, as and when the economy recovers the greater operating leverage is in mid-caps which will play out over the next two years.
Any significant decline from here is unlikely given that inflation differentials between India and the USA are very low now and INR has already fallen 10 percent this year, he said.
The outlook on global equity markets, and as such for India, are positive. The economic growth outlook is strong, inflation benign and central bank interest rates are still accommodative for the growth.
merging Markets (EMs) have seen a sell-off led by China fears and Dollar Index up move. However, this has bought the markets to extremely oversold levels on an overall EM analysis. As such, flows to EMs are likely to pick up going forward and India will also benefit
If this is the right time to go out and buy – which theme according to you holds most potential? Is it the large-caps space or mid-caps and why? Also, what should be the criteria of picking companies?
The greater value is in midcaps today given the sell-off seen in this space. A large part of the large-cap universe, especially retail banks and consumer stocks, is somewhat overvalued despite strong growth fundamentals.
Capital Goods and infrastructure stocks, select pharmaceutical stocks and individual stocks in the mid-caps offer value. The criteria have to be valuations relative to growth prospects. Looking into the rearview mirror to forecast the future is not a great idea.
Rupee is posing as a big headwind for Indian markets. Do you think we could hit Rs 71-72/USD in the next 6 months? What will be its implications on stocks, and economy?
he rupee is not a headwind as long as we are in line with other EM currencies. The Chinese Yuan and INR have fallen the same. Currencies have no absolute value, it is all relative.
Any significant decline from here is unlikely given that inflation differentials between India and the USA are very low now and INR has already fallen 10 percent this year
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