Attended the Kotak Mutual Fund Conference Call today where Nilesh Shah,MD,Kotak Mutual Fund spoke on the Market Outlook.
Key takeaways:
- Major fears/overhangs on the market
- Farm Loan Waivers-Feels the impact won’t be much despite the scary headline numbers
- NPAs-Feels a beginning has been made to end this problem.But there is a long way to go.Narrated a humorous anecdote where the MD of a PSU Bank told him: “If RBI wants me to make so much provisions, they should provide the capital also else they should run the Bank”
- Geo-Political Risks- Border fight with China & North Korea may impact EM flows
- MSCI Index Changes-Addition of Chinese mainland stocks can reduce India’s weightage impacting ETF flows
- On GST
- Feels the initial implementation has been very smooth
- Q1 will be impacted as companies have reduced their inventories, compensated dealers and cut prices
- On interest rates
- Feels markets have priced in a rate cut
- Expects RBI to cut rates by 25 bps in August 2017
- On political risk
- Feels markets have priced in a Modi re-election in 2019
- Expects BJP to continue winning in 2017 Karnataka & Gujarat elections
- On fund flows
- Continues to be strong-Kotak has crossed 1L Crores AUM this month
- Says an IPO can be fully subscribed by going to Bandra-Kurla,Lower Parel and Nariman Point (Different locations in Mumbai) .No need to go to New York,London and Singapore !
- Believes 3 Themes are playing out
- Movement from Unorganized to Organized
- Movement from Physical Savings to Financial Savings
- Govt spending on Infrastructure
- Bullish on the following Sectors:
- Cement/Capital Goods/Autos/Auto Components
- Private Sector Banks
- Consumer NBFCs
- Bearish on the following Sectors:
- Export Based Companies (Including IT/Pharma)
- Telecom
- Commodities
- Real Estate