Daily Voice | Earnings upgrade to take a pause as input cost weighs on India Inc margins, says Pankaj Tibrewal of Kotak AMC

Asia's Tech News Daily

#Daily Voice, #MARKET OUTLOOK, #Nifty, #Sensex

The best of market breadth is behind us and, going forward, while earnings of overall index remains durable, there would be greater dispersion of winners and losers, suggesting that it could be a stock-pickers’ market, believes Pankaj Tibrewal, Equity Fund Manager at Kotak Mahindra Asset Management Company.

The US Dollar Index (DXY) is inversely related to Indian stocks and the rising DXY index could be a source of volatility in the coming months, according to him.

“The earnings upgrade cycle, which has been supportive of the markets over the last few quarters should take a pause as input cost pressures weigh on the margins of Corporate India,” says the seasoned professional with exposure to the mutual fund industry and experience in managing a host of debt and equity schemes.

Do you think the market is expected to correct more in the coming months, even after falling more than 6 percent from record highs?

This has been a good year for the Indian equities. India appears to be in a structural uptrend with a likely new profit cycle, improvement in capex trends and supportive policy environment. However, in the near term, we are cautious on the overall markets.

Absolute valuations for India remain well above the historical averages and positive earnings revision which we see is concentrated mainly in the commodities sector.

Going ahead, in our view, the earnings upgrade cycle, which has been supportive of the markets over the last few quarters, should take a pause as input cost pressures weigh on the margins of Corporate India. Strong performance of Indian markets has led to Indian equities premium to emerging markets (EM) equities going up to decade-high levels.

In our view, the best of the market breadth is behind us and going forward, while earnings of the overall index remains durable, there would be greater dispersion of winners and losers, suggesting that it could be a stock pickers market.

Also read – Which are the best passive mutual funds for your portfolio?

What could be the reasons behind the significant FII selling taking place in the equity market? What is the indication you get from gradual rising in the US dollar index?

The 2021 flows are at $8.3 billion, but the bulk of it came in the first three months of the year, while flows since April 2021 to till date are only around $1 billion. In our discussion, FII investors seem to believe that there is better value elsewhere, given India’s strong rally this year. MSCI India Index has outperformed the MSCI EM Index by almost 30 percent in 2021 till date.

The US Dollar Index (DXY) is inversely related to Indian stocks and rising DXY index could be a source of volatility in the coming months.

Do you think investors should be more cautious on the equity market now and shift focus to other asset classes?

Also read – IPO-bound SaaS Company RateGain expects global acquisitions to lift profits as travel picks up

We believe that after a sharp rally in the market over the last 18 months, investors should exert some caution in the near term. This has been the third longest rally in the markets without even 10 percent correction. The advice to investors would be not to invest in equity markets looking at the past one-year returns. After the strong rally, one should moderate return expectations going forward.

Also, equities as an asset class can be volatile in the short to medium term. One might even see a sharp drop in portfolio value and that too suddenly. So only those who are willing to fathom this kind of volatility should invest in them.

We would advise investors to follow asset allocation and be disciplined in their investment approach. At the current juncture, anyone considering fresh investments, can stagger their investments through Systematic Investment Plan (SIP) or Systematic Transfer Plan (STP).

What are the key themes that you are betting on for 2022?

Well, let’s go down the preferred themes one by one.

Revival of residential real estate

We are positive on is the revival of the residential real estate cycle led by lower mortgage rates, best affordability in the last two-and-a-half decades, stagnant property prices and need for bigger houses after COVID. We are positive on the home improvement and building material space and believe that real estate ancillary industries are the best proxy to ride the revival in residential real estate.

Big becoming bigger, strong getting stronger

The theme of consolidation and market share gains within sectors continues to play out. We seek to focus on sectoral leaders, companies, which are gaining market share in their sectors. The shift from the unorganised to the organised continues and company balance sheets by and large are stronger now than a few years ago.

Revival of investment cycle

Corporate India has deleveraged over the last few years and balance sheet of India Inc are in good shape after COVID. Most corporates across sectors are looking to deploy the cash flows back on expansion. Also PLI and ‘China plus one’ helping the investment cycle. We are positive on capital goods and industrial sector.

What is the top wall of worries the market is going to face?

An upward shift in the US interest rate cycle, rising oil prices, a potential third wave of COVID-19, higher domestic rates, strong trailing outperformance versus emerging markets (30ppt over six months) and exuberance in the broad market are expected to be the top wall of worries that the market is going to face in coming months.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.

Internet Explorer Channel Network
Asia's Tech News Daily
News Related


EXPLAINER: How sweeping EU rules would curb tech companies

LONDON — Online companies would have to ramp up efforts to keep harmful content off their platforms and take other steps to protect users under rules that European Union lawmakers ... Read more »

Reverse gas supplies via Yamal-Europe continue for one month

Gazprom noted that it supplied gas to Europe in accordance with consumers’ requests under current contracts Read more »

Standard Chartered names new chief operations, technology officer to turbocharge bank's digital transformation

Standard Chartered has combined the leadership of its operations and technology divisions under one executive following the departure of its chief operating officer. Roel Louwhoff will take on the new ... Read more »

Germany expects COVID-19 cases to peak in mid-February

The Associated PressPeople rush to a train at a subway station in Frankfurt, Germany, Thursday, Jan. 20, 2022 as the daily number of COVID-19 infections are rising again. (AP Photo/Michael ... Read more »

VU returns human rights research funding from China

The university’s main entrance. Photo: Galaufs via Wikimedia Commons The VU university in Amsterdam will stop accepting funds from China to finance a centre for human rights following revelations by ... Read more »

LG Electronics planning to build regional HQ in Riyadh

Photo by: LG Website LG Electronics is said to be mulling on setting up its regional headquarters in Saudi Arabia’s capital city, Riyadh. This means that the company may relocate ... Read more »

Coca-Cola debuts new Coffee Mocha drink flavor

Photo by: Coca-Cola Press Release Coca-Cola announced the release of a new drink, and it was added to its line of coffee and coke blends. The Atlanta, Georgia-headquartered beverage company ... Read more »

Long-haul carrier Emirates resumes Boeing 777 flights to US

DUBAI, United Arab Emirates — Long-haul carrier Emirates said Thursday it would resume its Boeing 777 flights to the U.S. amid an ongoing dispute over the rollout of new 5G ... Read more »

Thai GDP expected to grow 3.5%-4.5% in 2022 despite Omicron - FinMin

FILE PHOTO: Finance Minister Arkhom Termpittayapaisith speaks at the “Bangkok Post International Forum 2021: Unleashing the Future: A Glimpse into 2022 and Beyond” on Dec 2, 2021. (Bangkok Post photo) ... Read more »

Thai GDP growth of 4% still possible next year despite Omicron - FinMin

FILE PHOTO: Finance Minister Arkhom Termpittayapaisith speaks at the “Bangkok Post International Forum 2021: Unleashing the Future: A Glimpse into 2022 and Beyond” on Dec 2, 2021. (Bangkok Post photo) ... Read more »

McDonald's brings back Blueberry & Crème Pie

Photo by: McDonald’s Website McDonald's just brought back one of the favorite desserts, and it is now back in its stores. The fast-food chain is excited to reveal the return ... Read more »

More workers off sick, as supermarkets warn of empty shelves

The number of people off work sick was ‘exceptionally’ high for the second month in a row in December, according to health and safety companies ArboNed and Human Capital Care. ... Read more »

PepsiCo, Beyond Meat's first plant-based venture is reportedly a vegan jerky snack

Photo by: Beyond Meat Press Release PepsiCo and Beyond Meat have previously signed a joint venture to create plant-based food items. Now it was said that the companies have already ... Read more »

Amazon plans a clothing store for a Southern California mall

The Associated PressFILE – Daniel Thorpe, of Hoboken, N.J., uses the Amazon app to pay for his purchase at the Amazon 4-star store in the Soho neighborhood of New York, ... Read more »

Popeyes officially lands in India with its first store opening in Bengaluru

Photo by: Popeyes Press Release Popeyes has finally arrived in India, and the very first restaurant outlet is located in Koramangala in the south-eastern part of Bangalore or Bengaluru. Another ... Read more »

Swire Properties sells Florida site to a venture between Kushner family and New York-listed Reit Aimco

Hong Kong developer Swire Properties has sold a property site in Florida to a US venture partly owned by the family of Jared Kushner, the son-in-law of former president Donald ... Read more »

NFT: Coinbase, Mastercard team up for NFT marketplace purchases

Photo by: Jeremy Bezanger/Unsplash Coinbase and Mastercard have signed a deal for purchases on the former’s NFT marketplace. The aim of the partnership is to allow people who are not ... Read more »

Europe needs long-term contracts with gas suppliers, says Hungarian Foreign Minister

Russia has proved to be a reliable partner in this area, Peter Szijjarto stressed Read more »

Meet the ‘Covid expats' who moved abroad during the pandemic. Here's what they learned about work

Jasmina007 | E+ | Getty Images LONDON — Moving overseas might not seem like the most obvious thing to do during a pandemic, but for many people, Covid-19 provided the nudge they needed ... Read more »

Why the US Fed and PBOC both risk making policy mistakes

Over the past few months, one worry has been at the forefront of many investors’ minds: the threat of a major policy mistake by one of the world’s leading central ... Read more »

First Thai rice shipment delivered using Laos-China railway

A first shipment 1,000 tonnes of Thai rice has been delivered using the Lao-Chinese railway to Chongqing, marking a new chapter in exports to China, the Agriculture and Cooperatives Ministry ... Read more »

Asian stocks rise after China rate cuts, Japan export gain

The Associated PressA currency trader watches monitors at the foreign exchange dealing room of the KEB Hana Bank headquarters in Seoul, South Korea, Thursday, Jan. 20, 2022. Asian stock markets ... Read more »

Cryptocurrency: Crypto ATMs in Singapore deactivated amid bank clampdown

Photo by: Don Metznik/Pixabay Singapore is one of the countries that have cryptocurrency ATMs or automated teller machines for bitcoins. However, they were reportedly ordered shut down by the Singaporean ... Read more »

MOEX index up by 0.72% to 3461.73 points at trade start

By 7:00 Moscow time, the index was at 3451.5 Read more »

Australia wouldn't let Novak Djokovic in, but backpackers are accepted with open arms

Prime Minister Scott Morrison on Wednesday announced Australia will refund visa fees for vaccinated backpackers who arrive within the next three months. The country — whose tight, pandemic border policies ... Read more »

Army Corps to spend $732M on Mississippi River lock upgrade

ST. LOUIS — The U.S. Army Corps said it will spend $732 million to expand a lock and dam system to help barges more efficiently transport millions of tons of ... Read more »

Dollar rises to 76.22 rubles

Euro remains at 86.45 rubles Read more »

Evergrande, Kaisa and other indebted developers get a break as China's rate cuts release funds to relieve their cash crunch and mounting debt

China’s publicly traded developers soared in the stock market, as the first cut in mortgage rates in two years combined with a government plan to grant them easier access to ... Read more »

Place your bets on Chinese stocks to beat global peers in the next six months on policy divergence, BCA Research says

Chinese stocks, among the worst performers in 2021, are likely to outperform global peers within the next six months, offering protection from a sell-off stoked by higher US Treasury yields, ... Read more »

Unilever won't up £50bn offer for GSK-Pfizer unit

British pharmaceutical group GlaxoSmithKline said it had received three unsolicited offers from Unilever for GSK Consumer Healthcare — all of which were rejected for being too low LONDON: Consumer goods ... Read more »

Alibaba, Chinese developers lift Hong Kong stocks to two-month high as China cuts interest rates, unveils spending stimulus

Hong Kong stocks rose to the highest level in about two months after China cut a key lending rate for a second time in a month and stepped up infrastructure ... Read more »

World Bank chief contrasts Microsoft deal with poor countries' debt

World Bank President David Malpass said debt payments poor countries need to make are “staggering” and debt loads are becoming unsustainable WASHINGTON: After Microsoft announced it would spend tens of ... Read more »

China cuts benchmark loan rate for second consecutive month in latest response to economic slowdown

China cut its benchmark lending rate for the second consecutive month on Thursday in the latest move to shore up the cooling economy. The one-year loan prime rate (LPR) – ... Read more »

Jim Cramer, who once saw oil stocks as uninvestable, explains why he changed his mind

CNBC's Jim Cramer on Wednesday offered a defense of his newfound optimism about investing in oil stocks, contending that he changed his mind after concluding the circumstances had evolved. “From ... Read more »

Cramer says not all stocks are struggling to start 2022: 'You just need to know where to look'

CNBC's Jim Cramer said Wednesday he believes it's possible for investors to build a successful portfolio despite Wall Street's tough start to 2022. “Real companies doing real things with tremendous ... Read more »

Cramer's lightning round: You're in good shape with Commercial Vehicle Group

DuPont de Nemours: “Sold it for the [charitable trust] yesterday. Why? Because it had moved up. We wanted to be able to take a good gain.” Commercial Vehicle Group: “I ... Read more »

Banks in Asia-Pacific must ‘make up ground fast' in implementing sustainability practices, according to Mazars study

Banks in the Asia-Pacific region need to “make up ground fast” in terms of implementing sustainability practices, as their global peers have made significant progress, according to a study by ... Read more »

AP FACT CHECK: Biden puffs up claims of virus, job gains

The Associated PressPresident Joe Biden leaves after a news conference in the East Room of the White House in Washington, Wednesday, Jan. 19, 2022. (AP Photo/Susan Walsh) WASHINGTON — In ... Read more »

Test & Go for overseas arrivals to be restored, fine-tuned

International passengers arrive at Suvarnabhumi airport on Dec 20, 2021, shortly before the suspension of the Test & Go entry scheme. (Photo: Varuth Hirunyatheb) The Test & Go programme will ... Read more »

SEC's Gensler says brokerage apps want users to trade frequently, which can be bad for small investors

Securities and Exchange Commission Chair Gary Gensler on Wednesday issued a warning to retail investors who use commission-free brokerage apps to buy and sell stocks. In an interview with CNBC's ... Read more »
On free-english-test.com you will find lots of free English exam practice materials to help you improve your English skills: grammar, listening, reading, writing, ielts, toeic