Here’s why Mirae Asset Global is upbeat on corporate banks, consumer discretionary, telecom

Rahul Chadha, chief investment officer at Mirae Asset Global Investments is of the clear view that it is going to be a slow long drawn-out recovery for the Indian economy and not a V-shaped one.

"Most people have talked about absence of investment cycle. What is also missed is that over last two-three years, we saw part of the growth particularly in India led by consumer credit and that is going to take a breather. So from an economy perspective, the economy is bottomed out but it is not going to be a V-shaped recovery,” he said.

Talking about US-Iran tensions and its impact on oil supply, he said, “There is enough stock of oil in the world whether it is with US, whether it is with China, we are not going to see immediate flare-up but one doesn’t know what added dimension this kind of a crisis in Middle East takes, how Iran reacts to it and how US counteracts to that. So there is uncertainty from a market perspective."

From a stock perspective, he said buy stocks that are not impacted by technological disruptions, buy stocks which have reasonable implied growth rate expectations building. "All these names with the expensive multiples may go through a time or a price correction in coming quarters. Don’t go overboard with your allocation. In that allocation whenever you get good entry points of 5-10 percent dip, increase your exposure there," he said in an interview with CNBC-TV18, adding that one would look to add names like corporate banks, insurance, telecom etc,.

When asked about telecom space, he said it is a sector that has not done anything for ten years. "Typically, when such moves happen, they happen for two-three years, the profit pool has got consolidated between three players. We have seen government nudge the players to behave well on pricing. So all that is good from a medium-term perspective. Globally, including India, data consumption is growing at least 30-40 percent. It is an under-owned sector. "

With regards to Titan Company, he said, “We own the name and at dips one would be looking to add because Titan is more a story of market share gains though the overall pie is not growing that much because of what is happening in the economy. However, because of their phenomenal execution, they have been gaining share at the expense of others. So obviously, at dips one would like to add that.”

Autos is something one would wait and watch for a while and restrain from bottom fishing in but look at consumer discretionary, said Chadha.

With regards to corporate banks, he said, “There is a better risk reward in corporate banks. Some of these names like ICICI Bank, Axis Bank and State Bank of India (SBI) are coming out with long asset played up cycle, net interest income (NII) growth should be anywhere between 10 percent and 15 percent, advances growth because of market share gains would be anywhere around 10-15 percent. That is where one would focus time and energy."