Outlook for 2019 is better than that of 2018: Amisha Vora

Corporate banks and within that, ICICI Bank is one of my top picks for 2019 because I feel their capital adequacy 67335268 67333350 67334575 is really very good and now since they have mostly declared their extremely large sensitive assets, Amisha Vora, Joint MD, Prabhudas Lilladher, tells ET Now. Edited excerpts: It looks like we are getting a little bit more enthusiastic in terms of the moves that we are seeing on D-Street. What is your outlook for the year ahead? I personally believe that across asset classes -- be it equity, debt, real estate or currency -- 2018 has been a wealth destructing year. More than 60% of the stocks corrected more than 30% despite a very modest gain in the Sensex. A large part of the stocks gave negative returns and compared to that, 2019 will be a much better year both in terms of the wider scale participation of stocks in the market as also the select stocks which will be larger in number as compared to last year and will give any portfolio a good 15-20% return potential despite the volatility which we expect to continue this year. The outlook for 2019 is much better than that of 2018. As we go into 2019, where would you hunt within the mid and smallcaps? The first target within the mid and smallcaps when market has corrected so much and since volatility is also going to be part of the game next year, will continue to remain within absolute quality. Within absolute quality, the three sectors one should keep in mind are a) domestic consumption; b) selective stories in capital goods and engineering; and c) banking and financials. But that is mostly largecap. But there are certain pockets within the mid and smallcap also which one can look at from the perspective of banking and financials. But largely these are the three sectors and within that quality and reasonable liquidity has to be looked for. Quality is a must and that combination has the potential to give very good returns. When we cover this kind of a midcap, smallcap universe as an organisation or as a PL, we know where to look at but not most of the stocks can be under our coverage. The coverage universe is still a little limited as compared to the opportunities when sectors within the coverage or the emphasis that we want to give are changing. As a combination of covered and uncovered, we have a basket of stocks which we think should give very good returns. You were pretty upbeat in terms of banking stocks. Do you still like ICICI Bank?Absolutely. Corporate banks and within that, ICICI Bank is one of my top picks for 2019 because I feel their capital adequacy is really very good and now since they have mostly declared their extremely large sensitive assets. So that is the first reason. Apart from that, their lending and advances will also grow and most importantly, the space which will be vacated by NBFCs, to some extent, will go to this bank. Plus, ICICI has very valuable subsidiaries and net of subsidiaries, it is still available at about 1.3 2020 price to book. This is very attractive and gradually over the next two to three years, they will continuously keep doing very well. But even this year, ICICI Bank should give very good returns. What about NBFCs? Incremental growth is seen coming off. Will that remain the NBFC story in the year ahead? A bit of the NBFC growth is bound to taper down except for a couple of names. Those names are Bajaj Finance, Mahindra Finance or L&T Finance which are very large and reputed corporate houses. Apart from that, credit growth will sober down for most. But the prices have corrected so much that it will probably reflect the kind of slowdown in credit growth of additional book value and most of these larger NBFCs had created a niche segment for themselves which is not directly in competition with banks. So, their NIMs would be slightly better. They will have a space for themselves to operate. A large part of pain of NBFCs is behind us. At the same time, I do feel that NBFC is not going to be the sector of the year for 2019 as it was for 2016 and 2017 etc. However, select NBFCs can still give very good returns. IT has done fairly well for the year gone by. What does this year bring for IT? There are two ways to look at the market in 2019. In my view, 2019 will have two, three distinct trends as compared to 2018. 2018 was a year of developed markets and emerging markets were at the receiving end as also their currencies and stock prices. In 2019, it will be a year of emerging markets and we will positive FII flows and that will help the currency and overall the business sentiment also will continue to be good. With this theory, I feel IT is a defensive but there is a segment in the market which feels volatility till elections will be very high and they think IT would be a good place to hide because of very competitive valuations and the nature of free cash generation. But I will underweight on IT for 2019.

from Economic Times http://bit.ly/2EYYafH