The year 2020 should be one of transition where economic recovery will take place is the word coming in from Hiren Ved, director & CIO of Alchemy Capital Management.
“Every few years we have a cycle where either economic growth is an issue or the current account or fiscal deficit is a problem and whenever the macro is at its worst, the subsequent years are very good and this happens because we get strong policy intervention and that is what we are beginning to see now,” he said.
Policy intervention started with the tax cut in September, followed by a series of other measures that have been taken and this is likely to continue as we go into the budget. "Therefore, typically the worst year for macro is when the markets bottom,” said Ved in an interview with CNBC-TV18.
Moreover, history suggests that a bad growth year is followed by a good year for markets, he added.
According to him, India is likely to see the benefits of reforms like Real Estate Regulatory Authority (RERA), goods and services tax (GST) in coming years.
Sector specific he said said, “IT stocks are a good hedge in the portfolio against any currency depreciation but they will grow at 8-10 percent. One cannot expect them to grow more.” However, stocks like TCS have delivered far better returns and we have seen PE expansion. Once in a while they take benefit of currency depreciation and so, they tend to do well,” he mentioned.
On the telecom space, he opined that the sector is coming out of its worst. "For us, this is likely to remain a low return on capital sector because the technological changes are so humongous - just when you finish 4G, the 5G spectrum bids will come out and companies will have to bid for that," he said adding that only Companies with a very strong balancesheet will survive this. "So there will get this incremental rallies in telecom,” he said.