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    Top 3 trends managers are bullish on in CY18: Kaustubh Belapurkar, Morningstar Investment

    Synopsis

    “Infy has been the only IT stock that has seen buying through 2017.”

    Kaustubh Belapurkar, Morningstar IndiaET Now
    In healthcare, managers are putting money into Sun Pharma, Dr Reddy’s to a certain extent and Aurobindo.
    In an interview with ET Now, Kaustubh Belapurkar, Morningstar Investment, says the three trends that fund managers are bullish in calender year 2018 are financials, utility space including NTPC and GAIL and the third trend is contra play in 3 sectors – specific stocks in telecom, pharma and IT.

    Edited excerpts:

    Is this turning out to be an exciting year for investors? Are they upbeat about making more money in the markets?
    Definitely so. We have had a great 2017 flows and returns of the funds have been exceptionally good for the past one year. The way we are looking at 2018 we expect that momentum to continue from retail investors.

    Talking about some of the trends that we saw in December 2017 and through the entire year of 2017, clearly there was a lot of buying in large cap banks but December was slightly different. Some of the unusual bank names came up. Traditionally, it has been the private banks that have been seeing a lot of buying but a bunch of QIPs came in from the PSU bank space. There was Punjab National Bank, which has obviously seen a lot of appreciation since the announcement of the bank recap, saw a fair bit of buying through the QIP.

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    Again HDFC Bank was a popular name. I am not really going to delve into too many details regarding that. Some other interesting plays are coming up. Interglobe Aviation is a counter in the airline space. It has really been seeing a lot of activity. We have seen an OFS from Interglobe a few months ago and the buying activity continues on that counter on Interglobe Aviation.

    The last name again is from a sector which has been ignored largely through 2017 and only started picking up steam over the last few months. Sun Pharma is the counter where we have been seeing a fair bit of buying for managers and that is really adding up for 2017.

    Is seems that money managers are feeling okay to take money off the table for some of the high fliers and reallocate that capital where value exists?
    Infy has been the only IT stock that has seen buying through 2017. The numbers suggest that in December, it was sold predominantly because of the buyback tendering that happened through a lot of mutual funds and that is where the selling is coming up. But if you look at 2017 numbers, in technology, Infy has led the pack and the rest of them have been largely flattish. So clearly this remains the only pick in the technology sector that managers are positive on.

    Among others, the Maruti stock has done exceptionally well through the last few years and there has been a huge appreciation. Some money has been taken off the table and if I look at the aggregate 2017 numbers, it is probably the largest sold stock by fund managers for the year.

    Some of the other interesting names, from a sector where we have only seen buying, IndusInd Bank is that one counter which has been flattish or marginally negative for the year. Some sort of profit booking has happened and a greater play seen towards the HDFCs, and the ICICIs of the world. So that has largely been the trend on flows. With so much money coming in to funds, largely we have seen buying on most counters.

    What about PSU banks? Do you think the opinion is changing there and that is getting reflected in the trend?
    I would say most definitely so. We have seen that PSU banks-- the SBIs of the world have always been popular with a bunch of fund managers and that reach has only increased to the rest of the industry. But BoB, PNB, Union Bank had some flows again through the QIP that they had in December.

    I would not say overarching optimism but definitely certain counters on that PSU bank space have witnessed buying post the announcement of recap.

    What are the top three trends that managers are most bullish on in this calendar year?
    One of the stories that continue is financials. We have seen that play out over the last couple of years and that still continues. We have seen that probably banks are not the largest pick right now. When you look at month on month numbers, clearly the trend is still upward moving in terms of financials and that is not necessarily only banks. We have seen a slew of insurance company IPOs, life and nonlife and managers have bought in quite heavily into that.

    Among asset managers, we had the first IPO come out through Reliance and there are a few more that are slated. I am sure there is going to be a lot of optimism and demand for those counters. So financials clearly remains one of the favourites.

    The others that we are seeing trends on are the utility space we saw a fair bit of pickup on something like a NPTC or a GAIL and we expect that to continue.

    The other sort of contra play and very selectively that is happening is in three sectors; one is communication services, an often ignored sector Bharti has gotten a lot of traction and we can see that continuing through 2018. Clearly the other counters not so much so. And healthcare and technology, again very selective buying.

    In healthcare, managers are putting money into Sun Pharma, Dr Reddy’s to a certain extent and Aurobindo. And that has really been the trend. In technology, clearly like we said it is Infy predominantly no other counter has really gathering that much momentum from managers.




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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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