homemarket NewsMarket looking overbought, earnings upgrades may come in second half of 2023: Andrew Holland
Market looking overbought, earnings upgrades may come in second half of 2023: Andrew Holland
"I'm okay with markets kind of drifting for a while now, until we get the next catalyst and next catalyst is really going to be the kind of earnings upgrades which will start in the second half of this fiscal going into 2024," Andrew Holland said
As domestic equities are expected to consolidate within a band for now and wait for triggers to move, either up or down, Andrew Holland, CEO of Avendus Capital Public Markets Alternate Strategies, spoke to CNBC-TV18 about potential investment opportunities in specific sectors such as auto and defence in the current market scenario. Holland also touched on ITC's proposal to demerge its hotels business.
The markets are in the overbought zone, Holland said, adding that the first quarter results are in-line but some negativity around certain sectors takes a froth away for the market. "So I'm okay with markets kind of drifting for a while now, until we get the next catalyst and next catalyst is really going to be the kind of earnings upgrades which will start in the second half of this fiscal going into 2024," he noted.
"So that's the key for the markets to move higher. So we've had a great run. Everything's worked in our favor, no one likes China, maybe that will change - there is a big stimulus package in China, and take some of those flows from India in the very short term. But otherwise, I have nothing to worry me at all at the moment, but I just think we got a very overbought territory," Holland said.
The market expert pointed out that there are certain sectors that will have the kind of run up. "I think the autos has had that eye popping victory, we are all looking at the auto components in over the next two to three months. It is where you're probably going to get better share price returns. Because I think as everyone keeps talking about electric vehicles (EVs), whether it's two-wheeler or four-wheeler, it's going to be auto component companies, which will do well, so auto components would be where I would be placing my bets. I mean, don't get me wrong, I wouldn't be out of the auto sector," he said.
He added, "We've always talked about the themes that we like and defense is one of them, renewable energy is another, capex cycle, electronics, in terms of the whole industry. So these are the things which you can continue to play out in terms of getting better performance. And the one that we added recently a few months back, was beverages in terms of non-alcoholic as well as alcoholic and the premiumization."
"You saw that with United Spirits results recently that everyone's moving up the value chain. And we're only at the start of this runway for the whole of the industry of nonalcoholic and alcoholic. So it's going to be a very strong earnings story over the next four to five years in line with the electronics industry. So those are the two which I would focus on at the moment," he noted.
Speaking about the anticipated demerger from ITC, he said: "It's been highly anticipated demerger. At the end of the day, it's a good move. And I think you have to look at it longer term as well, in terms of how it will help cash flow is going forward, but in terms of the excitement, I think it is probably over. It is a step in the right direction. But I think the market got overkeen in terms of some of the valuations and some of the thinking that was around this demerger."
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