Risk versus reward quite favourable, stay invested: Rahul Shah

“Now if we segregate, banking has been leading all the way and I think that it is seen in the performance also in most of the financial stocks as well,” says Rahul Shah, MOFSL.

The big concern of course is whether or not the US is going to hit the debt ceiling and what kind of domino impact it is going to have on world markets but that aside just wanted you to assess the micros here back home and what have you made of the earnings so far especially from the midcap end of the market?
I think obviously the biggest rally what we have seen in India is obviously one or two major factors; one is obviously softening of the crude prices which is most important for us and I think we have seen be it inflation, be it the GDP numbers all these are interlinked so if I look at that perspective the softer crude prices for India augurs very well.
And if we see that in the last four, five months two, three things have changed dramatically; one obviously the cooling off commodity prices which has helped and obviously in a scenario where and when we see the RBI policy in June where I think the interest rate should be a status quo. So I think all these things are interlinked.

Now if we talk about the earnings season I think so far I think whatever the numbers have come out in the Nifty universe what we feel is I think by and large were as per expectation or better than expectations except for the metals where we see the numbers have been a little bit softer which was as per expectations.

Now if we segregate, banking has been leading all the way and I think that it is seen in the performance also in most of the financial stocks as well.

I think it has been a mixed quarter for technology, however technology we have seen comeback in a couple of midcap stocks hitting 52-week high.

We feel that for our clients with a horizon of more than one, one and a half year view IT will play out very well. I think autos had a good set of numbers. I think the numbers were better than what we were expecting.

When we talk about the consumer discretionary spending which was visible in most of the managements commentary in this quarter, what we feel is that all these macros are favouring and I think large caps have already done well. Nifty trades at 18 times FY25 so I think which is a fair discount to the premium what we used to trade. And most importantly when we see Adani saga is getting into an end and I think when we started in January and we saw the turmoil in the markets and again which is somewhere getting settled.

So I feel all these things are favouring. I feel that risk versus reward is quite favourable, stay invested. Secondly I think when you talk about the midcaps I think midcaps also by and large select pockets have done well and stocks have done well. So I think still a lot of room for large cap stocks to do well from here.

Just wanted your own perspective on how this Make in India within the electrical segment story is going to pan out and whether these stocks could be what perhaps railways and defence were a year, year and a half back.
I think if you look at Dixon Technologies performance, post listing the stock has been a blockbuster but obviously the valuation remains a challenge. But if you look at in terms of market cap, then it looks cheaper.

If you want to create some kind of an allocation in the portfolio, you have very limited choice in this segment. I think Nixon is prominent player into it. So I would say that one should have small allocation, definitely in the portfolio. But yes the valuation will always remain a challenge for the high growth companies. There are other listed players as well. I think that Amber Enterprise also looks interesting if I have to compare with Dixon and so I think both look good. Amber and Dixon should be a part of the portfolio. That is what it looks like from here.