Real estate is on the cusp of revival; home improvement space poised to do well: Kotak AMC’s Pankaj Tibrewal

“After almost a decade of lull, we are seeing early signs of capital goods and industrial sector coming back. The reasons are, first, I think that corporate India has de-levered the balancesheet significantly over the last many years, interests are low and the government policies – whether it be in the form of production linked incentive (PLI) or Aatmanirbhar, or India becoming integral part of global supply chain is boarding well with companies planning now on the capex side after a really long time,” he said.

He also said that after two years of sharp underperformance, the broader markets have started performing better. He also expects midcaps and smallcaps to outperform largecaps.

“After 2 years of sharp underperformance, we have started seeing that broader markets have been doing far better. Last calendar year, mid and smallcaps outperformed largecaps. The trend continues calendar year-to-date (YTD) in this year as well."

"Our sense is that whenever we have seen a broad based economic recovery, the broader markets tends to do well. Our expectation is that FY22, with no lockdown being there, will be a broad based economic recovery and hence broader markets should do well,” he said.

Tirewal believes that as the market gets more broad bases, there will be bottomup stock picking opportunities.

“As the market starts getting broad based, you will see bottom-up stock picking opportunity. I think you will see some volatility along the way because we have seen one way ride, global bond yields rising is putting deterrent on the equity market valuation in the near term and that is a near term concern."

He said over the next 2-3 years, whatever government policies come along and the animal spirits there will be many bottom-up wealth creating opportunities.

According to Tibrewal, digitalization is a very powerful theme. He believes that the kind of spend, which is happening cloud will be beneficial for a lot of Indian companies.

He also expects many private companies in food delivery, insurance selling, and education to go public over the next 3-5 years.

Tibrewal is also positive on auto ancillaries. On the pharmaceuticals, he has a stock specific approach.