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market | IST

Nippon India AIF sees cyclical uptick in real estate, engineering, infra; cautious on IT

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Varun Goel, Head-Equity, Nippon India AIF says across the residential real estate, housing, finance, and all consumer discretionary names, they have around 15 to 20 per cent allocation in the portfolio, which the firm believes should see very good growth.

Varun Goel, Head-Equity, Nippon India AIF said they are almost fully invested at the current stage and would participate in the market uptick and would not take aggressive cash calls.
“We are also cautious about names and themes where we believe there are pockets of exuberance, where earnings are going to be difficult to catch up. Overall, we believe both the export story and the domestic cyclical stories are doing well and we wish to participate in them,” he added.
“So as far as our portfolio positioning is concerned, we are kind of participating in the upturn that we are seeing in the economy,” said Goel, adding that as the economic growth gradually comes back in the post-Covid World, “we should see several more sectors do well”.
“We think there is a cyclical uptick in sectors like real estate, engineering, and infrastructure on the back of huge spends and so to that extent, they are positive on those things. However, there are pockets of exuberance, and one needs to be really cautious on that,” he cautioned.
Talking about the spaces they are invested in their funds, Goel said they remain positive on the real estate space, especially in the residential real estate side. “We believe we are seeing early signs of price hikes and so the NAVs of real estate companies are very sensitive to price increases and so a 5 to 10 per cent price increase, which is seen in cities like Mumbai, Bangalore, Chennai, Hyderabad etc., will make a material difference to the NAV and so that is the space they would want to increase our exposure,” he said.
“We definitely like housing finance names, building materials, wires, cables, tiles, so anything to do with the real estate space, we are looking to increase exposure on that side. Across the residential real estate, housing, finance, and all these consumer discretionary names, we have around 15 to 20 per cent allocation in the portfolio, which we believe should see very good growth,” he said, adding that they are looking to trim some positions in the IT space because some of the midcaps have already seen a big rally. “In some names, we believe that the valuations are getting a little ahead of themselves. So that's where we are looking to book some profits,” he added.
For the full discussion, watch the video