Equity benchmark indices have been witnessing a steady run in the past few sessions, driven by banks as well as favourable developments due to GST.
With the passage of GST, the focus now moves to domestic stories, which could give good returns on the back of better business environment for such firms.
Macquarie Securities Group believes that the risk reward is in favour of investors and one could look at domestic stories in the current set-up with a measured approach.
There are headwinds in case of export stories due to political uncertainty and regulatory issues, Sandeep Bhatia, Head-Equity, India, Macquarie Securities Group told CNBC-TV18.
Earnings could face some pressure in the fourth quarter, but in 18-24 months, it will see much stronger earnings growth.
Bhatia has a portfolio strategy that is focused on India. He recommends looking at beneficiaries from GST implementation. One large-cap stock, according to him, is ITC. “Every year we see increase in cigarette taxes…stable tax regime will benefit it,” he told the channel. In the midcap space, he prefers Glenmark Pharmaceuticals as he likes their business.
In the consumption space, home improvement will be a very long-term story and it will play out in India. He bets on Crompton Greaves Consumer Electrical, Asian Paints and Voltas with a caveat on slightly higher valuations.
“Newspapers today are screaming about the heat wave. That is why air conditioners (ACs) and fan companies are seeing an uptick,” he added.
Furthermore, Bhatia sees GST to be a positive trigger for these firms.
Among metals, Vedanta has attracted his attention. “We have liked Vedanta and pushed it for six months…the stock has done very well,” he told the channel.
On housing and home improvement, he believes that the process of building cheap homes must be bigger in the country. Building cheaper homes is yet to happen on a state and country-wide basis, he believes. One can look at cement and other such established stories here, Bhatia said.
Reacting to the Supreme Court’s order to ban BS-III vehicles from April 1, he believes that the developments would be short term pain for companies. In fact, this sets the base for a stronger growth and next two years could see earnings upgrades not downgrades, he said. He prefers Maruti Suzuki and Tata Motors in the space.