Jaideep Arora, CEO, Sharekhan, has identified four
themes that could help generate good returns for investors in 2018. he said he expects corporate earnings to revive strongly owing to a low base. Excerpts:
With the Gujarat election over, the focus now shifts to the Budget... What do you expect?
Though
the BJP has retained power in Gujarat, looking at the analysis of
trends in rural areas, we believe that the Budget is likely to focus on
increasing spending on rural development schemes and initiatives to
boost farm income. The other focus areas could be supporting exports and
further increase allocation (public spending) on infra development in
the absence of any meaningful revival in private investment in the
immediate term.
Having said this, we expect the
government to strike the right balance between fiscal prudence and
populist measures in the forthcoming Union Budget.
Do you have any Budget wish-list for the industry?
We believe that the tax benefit on long-term capital gain should continue.
STT
(Securities Transaction Tax) is still very high, and is resultantly
affecting liquidity in the market. Also, we expect introduction of more
tax benefits for investments in equities for the salaried class to
increase their participation in the market. Additionally, simplification
of the GST will support the service industry.
Given
the elevated level of the market, which are the sectors that look
promising in 2018? What is your overall outlook for equities?
In
the coming months, corporate earnings are likely to revive strongly
owing to low base and expected recovery in economic growth. Earnings of
Sensex companies are expected to grow, aided by strong performance of
the automobile, banking and energy sectors.
We have
identified few structural growth themes that could aid investors. The
themes are: financialisation, which means household savings moving to
financial assets; formalisation — shift of market share from unorganised
to organised players in fragmented segments; government expenditure on
roads/ rail/ defence and affordable housing projects; and the evergreen
consumption theme that has given multi-baggers regularly.
Going
by these themes, the sectors that look attractive are insurance, AMC,
NBFC, private sector banks, auto ancillary, footwear, building products,
consumer electrical products, cement, steel, paints and housing finance
companies.
Do you expect robust fund flow from domestic investors into the markets in 2018 too?
A
substantial part of retail inflows are coming into equities through
systematic investment plan which tend to be more stable in nature.
Moreover, given the limited opportunities in other asset classes and
relatively superior returns from equities in the next few years, we
expect a fair share of household savings to flow into equities next year
also.
How are things panning out in Sharekhan after the BNP Paribas takeover? Are you looking at acquisitions in the broking space?
The
adaptation of practices has been quite smooth and we have set an
ambitious development plan since the very beginning of the acquisition.
Currently,
we are growing organically and are focused towards acquiring new
customers and building new business lines such as mutual funds,
insurance, loan against securities and adding new business partners.
With
Robo Advisory ruling the roost in the investment industry, what is the
scenario at Sharekhan? Are you also spending heavily on technology?
Sharekhan
pioneered the online retail broking industry and leveraged on the first
wave of digitisation in 2000. Technology is at the core of our strategy
and we are all geared up to enhance in this field. We have already
launched InstaMF — an online platform for investing in mutual funds, the
Sharekhan mobile app and a new and improved website with better
features.
We have also launched NEO — the robo
advisor for mutual fund investors that help investors to plan and
implement financial goals in a pre-determined time-frame. At Sharekhan,
we aim to achieve 90 per cent digital transactions.
04 Jan 2018, 07:05 AM