Focus on cycles, not structural trends; better opportunities in 4 sectors: Anish Tawakley
Anish Tawakley, Deputy CIO-Equity, ICICI Prudential AMC, says he focuses more on cycles than on big 10-year structural trends. On a 10-year structural trend, one has to be in the right company because even if you look at the retailing example, it is a 10-year, 20-year trend, but it is not as if every company has done well. There are better opportunities in automobiles, capital goods, cement, and real estate because that is a sector that could still produce earnings surprises.
Tawakley also says that we are still in an upcycle at the moment economically. We will reach the peak of this cycle when power capacity utilisation peaks.
Let us start with your market view risk versus reward, how would you map the current market setup for our viewers?
Anish Tawakley: At this point, the earnings outlook is reasonably good given that the economy is in good health. The market valuations are not cheap. So, anybody coming into the market should be coming in with at least a three-year view. One should not be coming in for very short-term gains. But the economic outlook is very healthy and the earnings outlook is also reasonably robust.
Earnings are not keeping pace with expectations, especially if I look at last quarter, there were hardly any upgrades; they were more in line and there were a lot of downgrades.
Anish Tawakley: It is a market in which you have to be careful. There are some stocks and there are some areas of the market. There are areas in every sector where some companies, the expectations have gone up too much. I do
