Expect risk reward to be in favour of midcaps over next 18-24 months, says Kotak AMC

Pankaj Tibrewal, Senior Vice President & Equity Fund Manager of Kotak Mahindra AMC said, “For the last few months, we have been calling out that mid and smallcaps after a sharp underperformance since January 2018, probably were trading at historical extremes in terms of valuations versus largecaps. We, believe that it is just a start and our call is that over the next 18-24 months, the risk reward in this space would be much better."

"This space is far more dependent on the domestic economy and hence for this space to comeback will be contingent upon the macro recovery,” he said.

Rural sector is one that could surprise us this year because globally agri-commodity prices have been coming back very strongly over the last three months, said Tibrewal. In India, also if you look at various agri-commodities like milk, wheat, soya, rice, all are up over the next 3-4 months. This bodes well for the farmers and hence you are seeing some kind of movement in the agri stocks, whether it is fertilizers or companies dealing with insecticides and pesticides, he said in an interview with CNBC-TV18.

"In our overall portfolio, we are playing investment cycle revival over consumption. Our view is that over the next 2-3 years this theme over consumption should be much better in our portfolios in terms of returns,” he said.

“We believe that in the consumption basket there are some consumer discretionary names, which are trading at attractive valuations and where the growth engine is quite strong. We hold some of the names in our portfolios,” he added.

"So, with regards to consumption, we are very stock specific and in consumer discretionary, we are riding on few names like Bluestar, Hawkins Cookers, Pratap Snacks etc, as well as maybe a mattress company where we believe that the run way for growth is humongous in the coming years and the valuations are not very expensive,” he added.