Vetri Subramaniam, Chief Investment Officer (CIO), UTI AMC.
“India’s macros are in relatively much better shape than the rest of the world. The potential for much better long-term growth rates exists. But there are investors who can look for cheap valuation areas in other parts of the world where a potential cyclical cycle could unfold.
Subramaniam maintains that they do not operate with a one-size-fits-all approach. “Having said that, financials have some of the strongest balance sheets in the lending industry and have the potential to gain additional market share. IT has had a sell off and we have seen a valuation correction and earnings appear to be coming back and we are now seeing valuation comfort.
Given that commodity prices have recently fallen, Subramaniam believes that if you look back, commodity prices have seen significant gains over the past year. “The structure of US market inflation has to do with the services side and a tight labor market – more to do with the labor market and not with commodity markets. I think the pace of rate hikes will slow down in the US.
Despite the rally in rail and defense stocks, Subramaniam sees no reason to buy these stocks. “I’m not a proponent of buying these stocks as the risk-reward doesn’t look favourable. Valuations in the domestic pharma sector look attractive on a relative basis and companies are focused on spending and key growth activities for the industry. The sector looks attractive in the long term.