Indian shares are no longer cheap after recording their biggest annual rise since 1991, investment strategists overseeing the country's top performing equity funds for 2009 said on Tuesday.
Indian shares rose 81% in 2009, driven by a flood of foreign funds, stretching 12 months forward price to earnings multiple of India's benchmark index to nearly 17 times, one of the most expensive in Asia.
"Markets are not cheap any longer... the earnings have come on the back of substantial fiscal and monetary stimulus," Sankaran Naren, equities chief investment officer at ICICI Prudential Asset Management said in the Reuters Trading India chat room. "International valuations are cheap compared to Indian markets."
"In large caps, stocks are pretty fairly valued, so one does not see pure value picks there. However, in midcaps, there are some value picks," Rajat Jain, chief investment officer of Principal PNB Mutual Fund, overseeing Rs 8,000 crore of funds, also said in the chat room.
While Naren, who manages Rs 7500 crore of equity assets, said his main bets were in the healthcare, telecom and utilities sectors, Jain prefers financials, consumer firms, construction, industrials and some infrastructure companies.
Principal's funds, including its Emerging Bluechip Fund which rose 147.3% in 2009 as the top Indian fund, holds shares such as state-run State Bank of India and private sector lenders ICICI Bank and HDFC Bank.
Bad loans are not a serious concern and could even surprise positively, said Jain.
Sankaran Naren, whose ICICI Prudential Discovery Fund gained 134.3% in 2009, said he was overweight telecom as it is the sector which is seeing a cyclical downturn due to competition. "My belief is that it will work, there is too much crowding in other themes," he said.
His funds hold shares such as Bharti Airtel and Mahanagar Telephone Nigam Ltd.
"Pharma is very cheap given the certainty of earnings," he said, adding he liked power utilities as a defensive bet.
Drug firms Cadila Healthcare and and FDC are among his discovery fund's top-5 picks. His investments from the utilities sector includes Tata Power Company and Indraprastha Gas.
Shun realty
Real estate was the one sector both the fund strategists said they were wary of.
"The sector is new to the stockmarket and we do not know how to value landbanks," said ICICI's Naren. "The sector is too volatile for investors."
Jain added that the problems of real estate firms were not behind them and they still faced execution challenges.
These concerns were aired hours after Godrej Properties surged nearly 20% after listing at a 5.05 percent premium on its debut on Tuesday, in a first listing by any property firm in over two years.
Source: http://www.moneycontrol.com/news/market-outlook/stocks-no-longer-cheap-ace-fund-managers_433991.html
Indian shares rose 81% in 2009, driven by a flood of foreign funds, stretching 12 months forward price to earnings multiple of India's benchmark index to nearly 17 times, one of the most expensive in Asia.
"Markets are not cheap any longer... the earnings have come on the back of substantial fiscal and monetary stimulus," Sankaran Naren, equities chief investment officer at ICICI Prudential Asset Management said in the Reuters Trading India chat room. "International valuations are cheap compared to Indian markets."
"In large caps, stocks are pretty fairly valued, so one does not see pure value picks there. However, in midcaps, there are some value picks," Rajat Jain, chief investment officer of Principal PNB Mutual Fund, overseeing Rs 8,000 crore of funds, also said in the chat room.
While Naren, who manages Rs 7500 crore of equity assets, said his main bets were in the healthcare, telecom and utilities sectors, Jain prefers financials, consumer firms, construction, industrials and some infrastructure companies.
Principal's funds, including its Emerging Bluechip Fund which rose 147.3% in 2009 as the top Indian fund, holds shares such as state-run State Bank of India and private sector lenders ICICI Bank and HDFC Bank.
Bad loans are not a serious concern and could even surprise positively, said Jain.
Sankaran Naren, whose ICICI Prudential Discovery Fund gained 134.3% in 2009, said he was overweight telecom as it is the sector which is seeing a cyclical downturn due to competition. "My belief is that it will work, there is too much crowding in other themes," he said.
His funds hold shares such as Bharti Airtel and Mahanagar Telephone Nigam Ltd.
"Pharma is very cheap given the certainty of earnings," he said, adding he liked power utilities as a defensive bet.
Drug firms Cadila Healthcare and and FDC are among his discovery fund's top-5 picks. His investments from the utilities sector includes Tata Power Company and Indraprastha Gas.
Shun realty
Real estate was the one sector both the fund strategists said they were wary of.
"The sector is new to the stockmarket and we do not know how to value landbanks," said ICICI's Naren. "The sector is too volatile for investors."
Jain added that the problems of real estate firms were not behind them and they still faced execution challenges.
These concerns were aired hours after Godrej Properties surged nearly 20% after listing at a 5.05 percent premium on its debut on Tuesday, in a first listing by any property firm in over two years.
Source: http://www.moneycontrol.com/news/market-outlook/stocks-no-longer-cheap-ace-fund-managers_433991.html
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