Sundaram MF bets on private lenders, expects Nifty at 13,500 in a year

"There is no competition for private sector banks either from NBFCs or PSU Banks. Lending in the economy will be dominated by private banks. Corporate oriented banks are now building retail books rapidly. Margins, as well as the market share of good quality private banks, will go up," he said.

"Mutual funds have drastically reduced their lending to NBFCs. Many NBFCs have lent to the commercial vehicle segment which is already facing a cyclical downturn. Thus, such NBFCs will continue to face NPA problems," Subramaniam said.

Subramaniam noted that the auto sector is showing green shoots of recovery as there is hope for demand revival, “Valuations have corrected very sharply and now look attractive. The worst is behind for the auto sector but the recovery will be U-shaped."

Looking at current valuations, Subramaniam believes that this is a good time to buy good quality stocks. Taking on the foreign inflows into Indian equities, he noted that India is a very attractive destination in a low-oil price scenario. Further, foreign inflows were high on hopes that the government will liberalize FII norms.

“There is more room for dilution of PSUs and many foreign investors are interested in good quality PSUs,” he added.

On broader markets, he expects midcap stocks will outperform large caps in the coming 18-24 months as FIIs are shifting their focus towards midcaps. He also expects that diversified fund managers will allocate more to mid and small caps.

On the global front, Subramaniam said that there is a huge opportunity for India amid the global chaos. India can benefit from events such as Brexit and US-China trade war.

"Tax cut for new manufacturing companies to 17 percent will not only give impetus to domestic companies but also attract foreign companies to set up their shops and factories in India. India faces a huge challenge of job creation and the manufacturing sector is the one that has the potential to generate employment for a larger population. Markets also celebrated the fact that Indian companies will show better EPS and more FDI will be attracted,” he said.

When asked about the market performance despite weak economic conditions, Subramaniam believed that the markets have risen due to the availability of ample liquidity.

"The foreign inflows this year has been around Rs 90,000 crore, while domestic mutual fund inflows into equity markets have been close to Rs 55,000 crore. Moreover, markets looking at downturn as cyclical and temporary," he added.