The recent correction in Indian equities has created an opportunity for long-term investors, according to Amisha Vora, Chairperson and Managing Director of PL Capital, who believes patience and selective buying can help investors benefit once macro headwinds ease.
Vora said markets may not stage an immediate recovery as concerns around higher crude oil prices, currency weakness and inflation continue. However, she believes the correction in both prices and time has improved the risk-reward equation for investors looking beyond the near term.
“The market will not have a complete V-shaped recovery,” she said, adding that investors have been dealing with oil, currency aided now by inflation post El Nino for several quarters. “For that last one or two quarters of pain, one will have to keep a lot of courage.”
Vora expects investors to gradually deploy capital rather than wait for perfect market conditions. She said sectors with a combination of earnings visibility and reasonable valuations are likely to outperform as economic activity remains supportive.
Among her preferred sectors is the power space, where she highlighted companies such as Tata Power, CESC and Adani Power.
“Their earnings are very secured. Plus, there is growth, and we think that the valuations are not still too out of whack,” she said, adding that investors can gradually add, accumulate or buy such stocks.
She also sees opportunities in export-oriented businesses that could benefit from rupee depreciation, particularly pharmaceutical companies and textile exporters.
According to Vora, India’s investment cycle remains intact, supporting sectors such as capital goods and financials.
“Largely speaking, when inflation goes up, and India has just started its capex cycle, the credit growth will continue to be good. Select lenders, select capital goods companies will continue to do well,” she said.
On the recent selloff in the artificial intelligence (AI) infrastructure-linked stocks, Vora said the correction does not change the long-term data center investment story in India.
“The data center story in India is not going to go away because India has decided to have a lot of its data within India’s cloud,” she said.
She identified Blue Star as one of the beneficiaries of both rising cooling demand and the expansion of data centres. Vora also pointed to forging and transformer manufacturers, saying they are critical suppliers to sectors including defence, railways, semiconductors and automobiles while also benefiting from export demand.
Despite ongoing volatility, Vora believes the correction has opened up opportunities across sectors for investors with a long-term investment horizon through careful stock selection.
For the full interview, watch the accompanying video
Amisha Vora sees value after market correction, bets on power, pharma and capital goods
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