What could be the next mega trend in the market? Raamdeo Agrawal answers

Sushant Bhansali of Ambit Asset Management believes that the equity market rally in India is going to continue due to a broad-based market and positive changes in smallcaps. He expects margin expansion to reverse but with good sales growth. He sees opportunities in discretionary spending and expects competition in the paint industry to expand the market.

Banking, NBFCs, and MFIs are good places to invest as the Indian banking sector has cleaned up its books, making credit growth pick up significantly. Capital goods and power sector are well-poised for growth in the next 2-3 years with high government investment in railways, highways, and airports. Companies in the capital goods sector, despite some trading at high price-to-earnings ratios, are expected to contract PEs due to anticipated high growth in the next few quarters. Additionally, the pharma sector is expected to show strong earnings growth in the next 2-3 years.

Devang Mehta, Director - Equity Advisory, Spark Private Wealth, recommends investing in capital expenditure, capital goods/infrastructure, power ancillary, auto pack (passenger vehicles, tractors, two-wheelers), stock market-themed names in the financialisation sector, and the building material side (wires and cables, ceramics, home improvement) for profitable returns in the next few years.

“The banking profit pool this year is upwards of Rs 2 lakh crore and in next five years, it will be more like Rs 4-5 lakh crore. In 10 years time, it could be about Rs 10 lakh crore. In that profit pool, who is going to win? Some digital players will come in and make it very big in the next 5-7 years. Now who is that successful guy who is going to make it, that one has to spot. ”

Companies that consistently deliver high profit growth have the potential to generate large stock price returns for investors, with the regularity of growth often under-appreciated. A simple exercise using BSE 500 companies reveals that only a few firms can deliver high profit growth regularly, with a marked reduction in the number of qualifying firms with each additional year of minimum profit growth requirement. The pool of these few companies is better rewarded by markets over a long-time horizon than the overall basket.

Abakkus Asset Manager 's Sunil Singhania, highlights the growth potential in financial services and banks as it is natural for most investors to have an allocation to banks, plus profit growth looks strong in the next two years, interests rates are peaking and the practices of banks have improved significantly. Irrespective of what business you are in, every business will have to have a digital strategy at a time when there is going to be a huge opportunity for Indian IT service companies, believed to be globally competitive.

Nilesh Shah anticipates largecap IT decline, supports specialised technology services growth. He believes online consumer or the online fintech space are the businesses which are making rapid strides. While acknowledging market froth, advises against tactical allocations. shifting funds from small and midcaps to largecaps Further, Shah emphasizes bottom-up opportunities, energy sector potential, and regulatory risks in the insurance sector.

Sandeep Raina is not worried about the market crash. Further small cuts are possible, but it's not a bloodbath. Stay invested, the market will revive. Quality midcaps, smallcaps, and largecaps with 20% growth, good ROCE, and cash flows are worth investing. Pharma stocks like Beta Drugs, Kilpest, and Sun Pharma are interesting.

​In my viewpoint, since they are heavyweights on the index and they represent the indices, of course, so in such situation when they start going up because of the higher amount of money coming into the system as well I would think that indices would naturally go up.

Nitin Raheja says: “The consumer companies are great businesses with great cash flows and great returns. But growth is missing. Typically we look at businesses in high growth mode. We like to invest in businesses where we believe earnings can grow and double at almost 15% to 16% compounded over the next five years. We do not find that in some of these businesses.”