Top fund managers discuss key themes for 2021

Big getting bigger is a powerful theme post-pandemic, said Pankaj Tibrewal of Kotak Mahindra AMC.

“One of the key themes which has emerged as a powerful one in the post-pandemic era is - big is getting bigger. COVID has shown that in every sector, the top 5-6 guys are gaining lion share of incremental market share. Looking at banking, the top 6 banks are more than 60 percent incremental market share. In cement, the top 6 players are 90 percent incremental market share over the last 3 years. So, big getting bigger is a very powerful theme and I think the larger players in every sector will benefit out of it,” he said in an interview to CNBC-TV18.

Tibrewal said that animal spirits are returning across sectors and he believes that the manufacturing sector is showing signs of life.

“We believe that over the next few years the manufacturing sector which has stagnated in India for the last decade is showing signs of life. If you look at Invest India which is the nodal agency for attracting FDI inflows into the country, it is very encouraging to see that the investment pipeline, now which is active pipeline in discussion, is about USD 165 billion to be invested in terms of investment in India. When you speak to companies across sectors, you are seeing animal spirits coming back and that is a part to do with PLI, that is a part to do with Aatmanirbhar, and that is the part to do with China Plus strategy,” he said.

According to Tibrewal, the registration data in many micro-markets is encouraging and the best way to play the real estate revival is via home building and cement stocks.

Shreyash Devalkar of Axis Mutual Fund believes that midcaps will perform in-line with largecaps in 2021, if not outperform. He also said that the market breadth has improved post-pandemic.

“If you talk about any sector, there is some positivity and some companies in those sectors have emerged as clear leader. They have managed pandemic very well. Crisis after crisis in last many years, what we have observed is big gets bigger and the market share shifts in its favour and they have managed their cash flows and debt levels very well and that is where you are seeing the breadth increasing in the market post-pandemic,” he said.

According to Devalkar, the chemical industry will benefit from the Aatmanirbhar theme. However, he feels that the manufacturing sector will need more handholding from the government.

“There is clear focus by the government on developing India as export and import substitute; both goes hand-in-hand. If you go by industry, then some of the industries like chemical industry -- if you extend right from basic chemical to API, to pharmaceutical – that entire chain has invested for decades in this space. With this help, I think they will gain and they are already gaining in that,” he said.