Trideep Bhattacharya, Chief Investment Officer – Equities at Edelweiss AMC, said domestic benchmarks have been undergoing an earnings downgrade cycle for the last one to one-and-a-half years.
“With the market around fair value, we’ll probably be in a (+/-)5 per cent range in the near term, after which the earnings upgrade cycle will hopefully start and truly bring better times for indices over a period of time. So in a nutshell, that’s my market hypothesis right now, where we are and where we are likely to be headed in the next 12 to 18 months,” Bhattacharya told Business Today on Monday.
The market veteran highlighted midcaps as a key growth area. “In fact, I would go ahead and say that midcap is probably the sweet spot of India as a market over the medium to long term,” he said, pointing out that sectors like hotels, hospitals and capital markets remain underpenetrated but are well represented within the midcap category.
“The growth drivers within this segment are quite robust, particularly over a 5-10 year horizon, and are positioned quite well to deliver wealth creation for investors.”
Bhattacharya also expressed optimism about the consumption space, where Edelweiss AMC has been increasing exposure over the past 6-9 months. “We started off being positive on luxury consumption and rural consumption and have ramped up our bets on mass consumption as well. Net-net, our portfolios are reasonably overweight on this sector, with GST rate cuts, tax cuts, monsoon and interest rate cuts all supporting the consumption domain,” he said.
The fund house is also bullish on non-banking financial companies (NBFCs), expecting the segment to benefit from rate cuts and reasonable valuations.
On the other hand, Bhattacharya maintained an underweight stance on commodity-linked sectors such as oil & gas, metals & mining and utilities.
A monthly SIP of Rs 10,000 in the Edelweiss Midcap Fund over 17 years grew from a total investment of Rs 20.4 lakh to Rs 1.48 crore, delivering a 21 per cent CAGR during the period.