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Returns on stocks will be much better in 2020, says Harsha Upadhyaya of Kotak MF

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The  investors have to move out of some of the expensive stocks and get into the ones where there was valuation comfort and not much downside, he said.

The stock market will look up and give much better return in 2020 than 2018 or 2019, as broader market valuations were in favour of long-term investors, said Harsha Upadhyaya, CIO-equity at Kotak Mutual Fund.
“Market is going to continue to scale wall of worries and we will look at 2020, as a year where returns are going to much better than 2018 or 2019,” Upadhyaya said on CNBC-TV18 .
The  investors have to move out of some of the expensive stocks and get into the ones where there was valuation comfort and not much downside, he said.
"So, it’s going to be a slow and gradual process as we do not see any immediate trigger for the second basket to start doing well at this point of time but from directional perspective we need to be there at some point of time in the future.”
On secotral front, Upadhyaya said, “I don’t think at this point of time there is clarity in terms of which are the sectors that are likely to do well but one thing is clear that some of the investment cycle oriented stocks could be a better bet as compared to consumption oriented sectors.”
However, from sectoral perspective non-consumption pocket was the one where we were betting at this point of time, he further added.
According to him, only select IT and pharma stocks will remain good defensive bets in 2020.
On auto sector, he said, “It’s difficult to say that the worst is over for the auto sector. We are in the camp that believes that while inventory levels in the overall auto sector have gone down during the festive season. To see a greater visibility in terms of demand revival or improvement in profitability, I think we are still sometime away and there are other disruptions like changing over towards BS-VI etc., which is going to entail higher cost for manufacturers.”
“Yes, there has been a pullback from the lower levels during the festive season because demand look okay in that particular phase, but now we are back to square one and there are issues in the sector. If we have to bet on a broader economic recovery, it’s better to bet on some of the areas where there has been lower ownership from institutional investors and also where there is relative comfort on valuation. So to that extent auto will remain an underweight position for us,” added Upadhyaya.
He further said that we have some exposure to steel stocks and we expected ferrous companies to do better than non-ferrous companies going ahead.
When asked about Budget expectations, Upadhyaya said, “This time Budget will have a little more focus than what it was in the past from an investor’s perspective and that will drive the market over the next few weeks rather than just the earning season.”

Market Movers

CompanyPriceChange%Loss
Asian Paints3,010.80 -57.75
Bajaj Finance6,016.80 -99.20
Nestle17,436.55 -212.60
HUL2,490.25 -24.10
Kotak Mahindra1,757.10 -14.95
CompanyPriceChange%Loss
Asian Paints3,010.85 -58.70
Bajaj Finance6,017.40 -98.45
Nestle17,451.20 -191.30
HUL2,489.60 -26.50
IndusInd Bank1,000.35 -7.45
CompanyPriceChange%Loss
Asian Paints3,010.80 -57.75 -1.88
Bajaj Finance6,016.80 -99.20 -1.62
Nestle17,436.55 -212.60 -1.20
HUL2,490.25 -24.10 -0.96
Kotak Mahindra1,757.10 -14.95 -0.84
CompanyPriceChange%Loss
Asian Paints3,010.85 -58.70 -1.91
Bajaj Finance6,017.40 -98.45 -1.61
Nestle17,451.20 -191.30 -1.08
HUL2,489.60 -26.50 -1.05
IndusInd Bank1,000.35 -7.45 -0.74

Currency

CompanyPriceChng%Chng
Dollar-Rupee74.36500.26500.36
Euro-Rupee88.50600.18800.21
Pound-Rupee103.48900.22600.22
Rupee-100 Yen0.6714-0.0002-0.04