“In the short term, markets could be volatile, but it should be viewed as a buying opportunity to accumulate good quality companies at every dip to construct a portfolio from 3-5 years investment horizon,” said Poonam Tandon of IndiaFirst Life Insurance Company in an interview to Moneycontrol’s Sunil Shankar Matkar.
IndiaFirst Life has been very bullish on the BFSI space over the past couple of quarters due to attractive valuations, and continues to believe prospects for IT and Pharma looks promising over the medium term.
Mumbai-headquartered, IndiaFirst Life Insurance Company, with a paid-up share capital of RS 663 crore, is one of the country’s youngest life insurance companies. The company is promoted by Bank of Baroda (with 44 percent stake), Union Bank of India (30 percent), and Carmel Point Investments India (26 percent).
In the last interview to Moneycontrol in October, she had recommended being selective and using any market correction to accumulate quality companies. The ongoing revival of the economic activity coupled with continued support from the government and the RBI in terms of pro-growth and liquidity measures would further aid sentiments, she said.
Now the CIO at IndiaFirst Life Insurance Company believes FII flows into India could remain healthy due to positive vaccine news, expected stimulus in the US and growing prospects of speedy economic recovery.
Q: Given the spectacular run in the last eight months taking to record highs, do you expect major sell-off in coming days? And do you expect the Nifty at 15,000 and Sensex at 50,000 by next year or recent high would be the top for next one year?
We will not be commenting on the near-term market movement or index levels. Having said that, we believe liquidity will not be a sole driver for the markets in the long run and eventually markets will be a function of earnings growth and valuation.
Q: After more than Rs 65,000 crore of FII inflow in November, the highest-ever monthly flow, do you expect the flow to slow down in coming days?
The low interest rates globally and risk-on trade is driving capital flows into EMs and India is getting its share. The recent adjustment in the MSCI Index has also aided the sentiments. We believe FII flows into India could remain healthy due to positive vaccine news, expected stimulus in the US and growing prospects of speedy economic recovery.
Q: What do you expect about overall earnings for the second half of FY21, and FY22, especially after better-than-expected September quarter earnings? Do you think 2HFY21 earnings are crucial to decide further trends?
The September quarter had an element of pent up demand and spill-over effect of the first quarter which saw massive economic contraction. The next two quarters are crucial as it will determine whether this economic recovery is sustainable post the festive season.
Q: Do you think it is still a buy on the dip market and why?
In the short term, markets could be volatile however, it should be viewed as a buying opportunity to accumulate good quality companies at every dip to construct a portfolio from 3-5 years investment horizon.
Q: Have you made significant changes in your portfolio after September quarter earnings? Should investors continue with the same set of stocks like IT and Pharma which had a strong run in the last 8 months or should one look for other sectors for investment which could give strong returns in the coming year (kindly explain those sectors)?
We have been very bullish on the BFSI space over the past couple of quarters due to attractive valuations. We have also been looking at companies with strong financials in the economy facing sectors (Metals, Cement, Infra) that were laggards over the past few quarters and have started seeing signs of recovery. Nevertheless, we continue to believe prospects for IT and Pharma looks promising over the medium term.
Q: Do you think India will really become a major manufacturing hub in coming years, though there is competition from other countries like Indonesia, Bangladesh etc?
We believe India has the potential to become a global manufacturing hub in coming years. However, a lot of effort is needed to build a favourable manufacturing ecosystem – policy, skilling and capital to attract global companies to set up bases in India. The current pandemic has offered us a brilliant opportunity to tap the global manufacturing looking to diversify their supply chain and reduce dependency on China. It now becomes imperative for the government to create a platform for global scale, environment incentivising businesses, ensure consistency in policies, professional bureaucratic process and response and simplified tax policy. The recent Production Linked Incentive (PLI) scheme is the good move and more such measures are required for incentivising investments both for global and domestic players.
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