To find if 2018 will be as good as 2017, we spoke to a few fund managers. Here is what they have to say.
S. Krishnakumar, CIO – Equity, Sundaram Mutual Fund
India story looks a lot stronger today. Certain reforms like GST and demonetisation have started to yield the benefits. We think that GDP growth will progressively improve from here.
Also, the government has taken care of corporate debt through recapitalisation of banks. We expect banks to deliver healthy growth given the resolution of the stressed assets.
Currently, the valuation are quite reasonable and we expect markets to rerate further. Going forward, only earnings growth will drive the markets.
Overall CY18 should be very positive. We expect the market to grow by 18-20% CAGR for the next two years.
Gopal Agrawal, CIO, Tata Mutual Fund
In 2018, stock selection will be the key. Investors will have to take a bottom up approach for stock selection. The PE ratio has already expanded in anticipation of earnings growth. The market returns will come from earnings growth. We expect a single digit growth for 2018 and 17-20% growth in 2019.
Saravana Kumar, CIO, LIC MF
We believe that India is poised for a cyclical upswing, which will support overall growth. Growth in consumption and pickup in private capex will support growth.
We expect that the banking space, IT, select pharma, telecom, agri inputs sector, select real estate, discretionary consumer sector, select infrastructure companies and capital good sector will do well in the coming year.
We also believe that the Union Budget in February 2018 will focus on employment creation particularly in rural economy. Thus, rural linked sectors like two wheeler, tractor, utilities vehicle, FMCG and agricultural input sector will benefit.
On the interest rate front, we expect the RBI to remain on an extended pause.
Jinesh Gopani, Head of Equities, Axis Mutual Fund
2018 will be more interesting, challenging and volatile for the market mainly due to factors like rising inflation and crude oil prices. On the positive side, there will be an improvement in the GDP growth. However, we have to see how the GST stabilises.
Also, a few states such as Karnataka and Madhya Pradesh will be going for elections. We have to see how the NDA government performs in these states. This can have an impact on the 2019 general elections.
In 2018, we will see the earnings momentum picking up. However, unlike the previous quarters where earnings growth was restricted to a few sectors, earnings growth will be on a broader scale. This will come on the back of urban and rural growth.
Given high valuations, we can also expect a correction in few stocks.
On sectors, we believe that sectors focussing on rural economies will grow faster considering the revival in demands. Sectors such as agro chemical, fertilisers, auto and consumption are likely to perform well.
Apart from this, if investors continue to pour in money into mutual funds, the market will perform well.
Nilesh Shetty, Equity fund manager, Quantum Mutual Fund
We believe that there is a downside risk to the market as market is very expensive. In my view, markets could possibly give negative returns of up to 10%.
We are worried about rising crude oil prices. This may affect the inflation and interest rates.
Coming to sectors, we are seeing a lot of value in IT and pharma sector.
We are also likely to see government focus on rural India. We also expect revival in government capex to create demand.
