Positive on IT, cautious on auto sector, says Carnelian Capital's Vikas Khemani

“You will see a fairly diversified bull market. Banking and financial services stocks would do very well. The manufacturing segment is the one segment where we are seeing a very big investment cycle picking up in the next three-four years. Capital goods stocks, industrials will do extremely well according to us,” he stated.

On auto stocks, he mentioned, “We have been fairly cautious on the auto sector.”

He believes in a bull market, midcap tends to outperform.

In terms of midcap stocks, he said, “We had a steep fall in midcaps, many of the midcap stocks went to 0.2-0.4 time book and the rally looked steep but a large part of this rally was also a correction back to the normalcy as the economy has come back. There is no doubt, as the economic environment or recovery takes place, some of the midcaps and small caps can grow faster. That is the reason there is this kind of movement in the midcap rally. In a bull market midcap at collective level tends to outperform.”

“Don’t get carried away by some of the steep returns. Remain disciplined, stay focused on the business and the management, that will determine whether you are able to retain that return or not,” Khemani advised.