Earnings recovery underway; mid and small caps better placed, says Carnelian Cap Advisors’ Vikas Khemani

He added that he is fairly positive on a well-diversified recovery over the next 3-4 years.

“I am fairly positive in general on the economic recovery over next 3-4 years. In fact I feel that COVID in some sense has been bad for humanity, but has been good for Indian economy. A lot of things which we otherwise expected as a trigger to the earnings growth, would not have come which COVID has brought to us. That is the reason I do see over the next 3-4 years a fairly broad based well diversified recovery and performance in the marketplace,” he said.

According to Khemani, largecaps will deliver strong returns if the economic recovery sustains.

However, mid and smallcaps will do better than largecaps, he said.

“India is in my opinion is at a stage where if the economic recovery sustains, which I believe will, you will see largecap delivering very superior returns – anywhere between 18 and 20 percent returns. However, one has to play based on whatever the risk appetite of individuals. In general mid and smallcaps should do better than largecaps,” he said.

He believes that there will be some volatility in the market around Budget, but he does not expect it to materially change the direction of the market.