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Earnings to go up as capacity utilization goes up and GST related transitional issues wane off
Sankaren Naren, CIO, ICICI Prudential Mutual Fund
Nov 17, 2017 | Source: Economic Times
The most important thing is asset allocation and thus investors should not ignore this in the investing life cycle. Sankaren Naren advice to investors is to invest both in Equity and Debt and also do SIPs in both asset classes, a prudent investing strategy.
With over 22% returns post demonetization, MFs are getting large amounts of money flows from retail investors and as a Fund Manager he remains worried because people seem to forget asset allocation, which in the long run is not advisable.
Corporate earnings are expected to catch up in the next two years and the cycle is attractive, albeit valuations are slightly stretched.
From a medium term perspective, IT and Pharma sectors are good investment bets and thus he advises to take the systematic route (SIP/STP) to invest in these sectors for the medium term.
He expects credit growth to shoot up as private sector capes cycle starts in the next 12-24 months. He also is of the opinion that just because of PSU bank re-capitalization credit growth is not going to kick start.
GST has been one major reform this year which could prove beneficial over the longer term. Also as GST related transitional issues go away, earnings will improve.
Government focus will be on implementation of reforms announced in the balance of the election cycle and Government will try to iron out issues that may come up in the process.
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