India has underperformed developed markets in a big way, said Tushar Pradhan, CIO at HSBC Global AMC, adding that the big developed markets are up 24-28 percent.
So, the question is will India now start doing well? According to him, at the moment the numbers aren’t telling us anything - the IIP, GDP numbers and it could be that way for some more time. However, "If the market senses something as a turnaround it is going to make a move anyways and it’s going to be substantially bigger than what we have seen in this year,” he said in an interview with CNBC-TV18.
Talking about sectoral themes, he said, “In every new rally you get new set of companies which lead the rally. So many people say, should we look at old cyclicals, are they the ones to move. Typically they are always the ones to follow, and from where the economy is going to drive itself is still a question mark because it’s very confusing at the moment.”
“Consumption comes at the end of the cycle. So it’s still going to be a longtime before all of those valuations correct and they start moving again. If you talk about early cyclicals, metal prices all over the world are not encouraging. So that is not an easy place to go. If you look at construction, private capex – those kind of companies, again I would think that it’s too early to see because the numbers are not there; the orders are there so we just have to wait and watch and see where the bright spot come and then follow it, but it’s just going to be as difficult to find out where it’s going to work,” added Pradhan.
He further said that midcaps may have corrected but are not as cheap as compared to smallcaps.
When asked about auto sector, Pradhan said, “Things are going to be very-very soft in the auto space and it’s going to be soft for some time. We have seen a bit of a spurt in the festival season, we have seen some bookings but as the next month comes along, we are going to see some softness again. I think auto cycles are not that quick, they do not bounce so quickly.”