Friday, November 28, 2014

See 17% to 20% upside in index from current levels: P Phani Sekhar, Angel Broking

In an interview with ET Now, P Phani Sekhar, Fund Manager-PMS, Angel Broking, shares his views on the markets. Excerpts:

ET Now: We have put two big rewarding series behind us. Do you think in the December series, the markets could extend themselves? Can they build on the existing gains or this is as good as it gets for the year?

P Phani Sekhar: We are good for some more time in December. History is with us. Historically, 9 out of 10 occasions in the last 10 years December has been good, not just for India but for global markets also. So I do not see anything on the global horizon that should turn the history this time around.
It is understandable considering the fact that many asset management books close in December. So, there is a propensity to close them on a high. On top of it, if you consider the India-specific situation, you are looking at large part of the winter session that will extend in December.
The Insurance Bill might be passed in Parliament, maybe in the third week of December. If GST is tabled, chances of which are low, that again will be a significant sentiment booster for the market.
All in all, things are looking interesting and the valuations are not at all very expensive. We are still trading at around 16 times on a consensus earnings growth forecast of around 17%. There is a good chance that 17% growth might be revised upwards in the next financial year.
We therefore see at least 17% to 20% upside in the index from these levels, and mid and small caps can still do well. So a combination of these factors is providing the much-needed confidence to invest in the markets on every decline.

ET Now: From the large cap space, what are you backing?

P Phani Sekhar: We are positive on the financials for quite some time. In the NBFC space, we are liking IDFC because as and when the infrastructure sector starts improving and there are several proposals on board now to revive the power sector especially and with allocation of coal mines, things will improve both on the metal side as well.
It will be reasonably better times compared to what it was last year for many of the infra lenders and IDFC since it is also transforming into a bank. So among the large cap space, considering huge valuation mismatch or valuation discount that IDFC is trading at, it is a good bet to back for the longer term. So I am looking at target of closer to 200 in one year's timeframe.

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