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If economy holds up, fish for mid and smallcap stocks: Mihir Vora, Max Life Insurance

ET Now|
Updated: Jun 26, 2019, 06.04 PM IST
Mihir Vora-1200


  • Positive on both retail as well as the corporate-oriented private banks.
  • IT is a stable bet with a growth rate that is very visible.
  • It will be difficult to take a sectoral view on pharma.
The market would be in a consolidation zone, waiting for the cues from the budget to discount the second half of the year, says Mihir Vora, Chief Investment Officer, Max Life Insurance. Excerpts from his interview with ETNOW.

Do you believe that at the current juncture we are poised to see a little bit more consolidation before there is any decisive up or down move? What do you believe is going to be the key trigger on the market’s mind?
Yes, consolidation is a good idea. On the positive side, always expectations build up before the budget. I do not think the sentiment would be too negative in the runup to the budget. The earnings are yet to pick up and as we have seen in the last many months, a lot of physical indicators are still looking weak. On the whole, I would say the market would be in a consolidation zone, waiting for the cues from the budget to discount the second half of the year which probably will depend on how much we do on the various issues regarding infrastructure and the NBFCs in the second half.

What is looking good to you right now? Where would you be putting your money if you are willing to deploy fresh capital into the markets at these levels?
The broad theme of the financial sector is private sector banks continuing to take away market share from the public sector banks. We are positive on both the retail as well as the corporate-oriented private sector banks. Some of the large public sector banks have probably passed the NPA hump. In general, financials in the private sector look good along with selected public sector banks. In terms of the overall currency situation, the US economy continues to do well and IT also looks like a good bet.

We have seen IT perform last month despite global headwinds, currency, H1-B visa issue and so on. How much more room is there for growth and what makes you so confident on the IT names?
IT tends to be a kind of hedge. If there is a global risk-off sentiment, you will see money being pulled out of emerging markets on a relative basis. If the currency depreciates, that would help IT in the short term. On the other hand, if there is a synchronised global growth like the one which we are seeing currently, then the US, which is the biggest market, should continue to do well. The demand situation should also continue to do well.

IT as a segment generates good cash flows. It has mostly high quality companies and it is a good stable bet with a growth rate that may not be the highest in the market but very visible.

Most experts say in case of pharma, one should bet more on domestic oriented names. Coming in on that global growth scenario, would the same logic apply to the pharma names or should you look at a whole host of other factors?
One would require to do a lot more individual stock specific work in pharma. It will be difficult to take a broad sectoral view because each company has a very different business mix, product mix, export and local mix. So it is a bit more complicated but valuations in general have been beaten down quite a lot.

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