Hello Samvat 2072: Kotak MF bets on consumption, cement

Economic Times

01-08-2025

Harsha Upadhyaya, CIO (equity) of Kotak Mutual Fund, expects annual corporate earnings growth to rise to 15 per cent-plus in FY17 and beyond. In a pre-Diwali interview with ETMarkets.com, he says the equity market is likely to grow about 15 per cent in the new Samvat. Excerpts:-
ETMarkets.com: Samvat 2071 failed to bring cheer to investors. What are your expectations from Samvat 2072? Where do you see Sensex and Nifty by next Diwali?
Harsha Upadhyaya: While there has been significant improvement in the macro-economic factors over the last year or so, corporate and business fundamentals have not improved to the same extent due to a sluggish demand scenario and inventory losses due to sharp correction in commodity prices. We expect next year to be much better. With interest rates easing, we may see a gradual pickup in consumption, which could lead to better utilisation of existing capacities and eventually kick off capex plans. The renewed focus on building infrastructure by the government will also start yielding results in the coming years. We are expecting annual corporate earnings growth to move up to 15 per cent-plus in FY17 and beyond. The equity market performance is likely to be broadly in line with the expected earnings growth and could be higher by about 15 per cent over the next year.
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ETMarkets.com: What, according to you, are the top five sectoral themes that should work well in Samvat 2072?
Harsha Upadhyaya: Urban consumption is likely to be strong going forward, given the drop in interest rates, positive impact of the seventh pay commission and improving corporate wage growth. The auto sector could be a major beneficiary of this trend. Even enablers such as banks focusing on retail business are likely to see better prospects. On the back of renewed government focus on building infrastructure, we expect the cement sector and select stocks from engineering/capital goods space to do well.
ETMarkets.com: After rallying over 15% in last one year, will midcaps outshine largecaps this Samvat?
Harsha Upadhyaya: Largecaps and midcaps are expected to give similar returns. However, the largecap segment may witness lesser volatility compared with the midcaps, as there has been significant time and value correction in this segment over the last 12-15 months.
ETMarkets.com: What are your views on gold? Should investors add more gold this Samvat or equities look like a better alternative?
Harsha Upadhyaya: Generally, gold as an asset class does well whenever there is either a scare of inflation or of financial instability. Currently, there is deflationary pressure across the globe. The financial markets are much calmer today compared with what they were a few years ago. Hence, we believe returns on gold could be muted going forward. Equity returns can handsomely beat gold returns over next one year. Also, equities are more tax-efficient. If you are build a portfolio of various asset classes, how much weightage would you give to different asset classes -- equity, fixed income asset, gold, real estate, alternative assets.
Equity 60 per cent, Fixed Income 20 per cent, Gold 5 per cent, Real Estate 15 per cent.