“There will be a lot of volatility in the market,” said Krishna Kumar Karwa, Managing Director at Emkay Global, in an interview with CNBC-TV18.
There are many macro headwinds both globally and locally with inflation being the key macro factor to be worried about and interest rates hardening, these two factors will determine the overall valuations as far as the market is concerned, he stated.
Some sectors have outperformed in the markets. Karwa expects these sectors to consolidate going forward.
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“So, it is going to be a very bottom-up kind of investors market where the phase where only astute investors will be able to find stocks, which will deliver returns. However, to expect across the board returns would not be the right way to look at it,” he explained.
Return expectations have to be muted and it could possibly be back-ended, he mentioned.
Sharing his prognosis on the banking space, he said, based on all fundamental factors, if one has to put incremental money to play, it has to be in the banking financial services sector.
“Banking is the sector to be in – that is the takeaway we believe. The top banks and some of the top non-banking financial companies (NBFCs) where valuations are reasonable should be able to show stellar growth,” he stated.
Karwa expects to see a lot of credit growth pick-up in the next two-three quarters as capex cycle picks up.
“Financials, which is also a Nifty heavyweight at around 35-40 percent, is the sector to possibly invest in where possibly the returns would be far superior than the benchmark indices,” he shared.
He believes the other sector which should do well will be the real estate sector. It has done well in the last six-nine months and should give good returns over the next 12-24 months.
According to him, there is still a lot of under-ownership in that sector and a lot of polarization as far as stock ownership is concerned. As investors become more and more comfortable, the tier-II, tier-III companies also in the real estate sector amongst the listed companies should do very well. Housing finance companies (HFCs) should also do well.
“My sense is this, it is one sector which should give you very good returns over the next twelve to twenty-four months,” Karwa said.
Services sector should do very well, be it travel, restaurants or entertainment. “That is the whole segment where we have seen some rally but going forward, every quarter, we should see a very good performance,” he stated.
“We have been very bullish on the whole IT space as well,” he added.
For the full interview, watch the accompanying video.
Catch all market updates here.
(Edited by : Dipikka Ghosh)
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