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Here's what Nippon India Mutual Fund would look at from the PSU banking space, says Manish Gunwani

Updated : December 04, 2019 11:20 AM IST

Typically, Dec tends to be a month where everyone reverses what has happened for the last 3-4 months.

If economic recovery is strong select real estate stocks could become multi baggers, said Manish Gunwani of Nippon India Mutual Fund.

Spending has picked up which will lead to economic recovery but taking a call on short-term recovery is difficult, said Manish Gunwani, CIO-equity investments at Nippon India Mutual Fund.

“A lot of the stocks are factoring in very weak economy for 2-3 years. So if you look at sectors like commercial vehicles, real estate, hotels etc., the assumptions built into the stocks are of a very weak recovery for a sustained period of time, but we all know that stocks will not work till the recovery happens. So that’s the dilemma of a fund manager as well,” he said in an interview with CNBC-TV18.

When asked about FII selling seen over the last few days, he said he was not too worried about that. "Typically, behaviourly, December tends to be a month where everyone reverses what has happened for the last 3-4 months because it is kind of shutting down the year from foreign fund manager perspective," he said adding that there would be some profit taking at EM level because last 2-3 months have been good for EMs, including India.

On PSU banks, Gunwani said they would be adding select large public sector undertaking (PSU) banks and would not look beyond top 3 PSU Banks. “It will be difficult for some of the tier-III and tier-IV PSU banks to develop the kind of technology and brand which will attract younger people,” he added.

When asked about his expectation from tomorrow's monetary policy, he said, the challenge has been transmission more than the repo. "I think what will happen tomorrow is mostly the repo. Now the question is, how much the end-user, in terms of home loan borrower etc., face a cut. I think that will happen irrespective of repo.”

Talking about the overall demand for autos, he said, “I definitely think the worst is over but you are not seeing pre-2018 kind of optimism still. Therefore, if credit spreads are coming down, the rates to the end-users are going down, fiscal spending has improved; global growth at least last 2-3 months has improved a bit. So if we have those cyclical factors behind, data should improve going forward.”

He further said that if economic recovery is strong select real estate stocks could become multi baggers.

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