Madhusudan Kela, Capital Chief Investment Strategist, Reliance Capital
Aug 05, 2016 | Source: Mint
Let us celebrate this day. To me it looks like really a done deal now. It is only a matter of formality because it was a historic vote in Rajya Sabha. We have never seen this kind of voting, 197 to 0. Let us not count the benefit in the next three-six months but it has taken 10 years for this bill. It has been discussed. So, every minute detail has been discussed. I am quite hopeful that this is a landmark thing from India perspective. However, from a foreigner perspective, it will go really a long way. I was flooded with phone calls from my friends out of India, whole of last night, they were all rejoicing that finally this crucial bill is passed and the way the government has done it is very remarkable.
Stage is set for our markets to hit new highs before the end of this year : That is what I am saying; sometimes you should also pat our back. We are the people who shouted through the roof in most difficult times that this is a market to buy. I would say let us also be practical that the markets have recovered quite a bit. We see some amount of euphoria but some amount of discomfort in terms of valuations in certain sectors. So, some of the positives are also built in the market. In the long run obviously India story remains pretty much intact as we have spoken for many years but maybe in the short term lot of these things - the GST is going to pass, there were near consensus, monsoon is good. This has been discussed with the market for last two months. So, in the near term I don't know how much more room the market has to go from here.
Signs of exuberance or overvaluation growth will take care of valuations going forward: Without a doubt. Wherever you think the valuations have run really ahead of the next two-three years growth and if you are a prudent investor -- someone taught me in the beginning that at the end of the day man grows old but the market never grows old. This business will continue, we will keep getting opportunities and wherever we get exuberance, wherever we get some of these NBFCs trading at five-six times book value I would strongly recommend that people who are prudent they should evaluate it is not a sector as a whole but it is some company where there is exuberance obviously profit should be taken.
Leadership emerge for this market to go higher: As we discussed even last time there is one theme which we continue to like wherein you will have to not be very sector specific but bottom up specific which is linked to consumption because in our view this seventh pay commission is a very big deal and it is going to deliver benefits to the corporate India over the next two-three years. So, whatever fall, whatever sectors or bottom up companies which fall under that consumption theme we continue to look at those companies whether they are in the travel and tourism space or whether they are into selective, into airline space, whether they are into media and entertainment space or a plethora of other sectors which get covered under this scheme. So, we continue to like bottom up stock picking on this space very clearly.