Consumption remains a favoured theme along with private sector banks. But stay away from public sector banks, telecom and pharmaceutical, said Gautam Trivedi, co-founder and managing partner, Nepean Capital.
Trivedi is of the view that the headline market isn’t going anywhere until the next Lok Sabha elections in 2019.
Moreover, out of the two legs that were driving this market, that is the retail domestic flows and foreign institutional investors (FII), the FIIs have exited India. But as long as the domestic flows sustain, it will augur well for the market, said Trivedi to CNBC-TV18.
Talking about the big correction seen in the midcaps space, he said there is no doubt that lot of midcaps have dropped 30-40% but many of them had already gone up 2 to 5 to 8 times. So a 30-40% drop is not that concerning.
Trivedi said, "Even now a lot of retail and foreign investors are keen to find the next interesting midcap idea that would turn into largecaps. Eicher Motors and Shree Cement were midcaps and one can see where they are today."
The house is very upbeat on Motherson Sumi and Varun Beverages, he said, adding that, these companies have worked so well with their original equipment manufacturer (OEM) clients that these clients have opened up new geographies for them to expand.
The other example of midcap becoming a largecap is Page Industries. More growth for the company is expected to come through going forward, said Trivedi.
With regards to commodities, he said a lot of good news has already played out. The growth for Jubilant Foodworks will continue, especially in other geographies, he added.
From the on-banking finance companies (NBFCs) space, Nepean Capital would stick with time tested stories like Bajaj Finance and Shriram Transport, because they are expected do well on back of retail credit doing better than corporate credit.
The house is also positive on Tata Motors and Ashok Leyland as downside is limited for the Tata company. Moreover, Tata Motors is giving employee stock ownership plan (ESOPs) to the top employees for the first time.
Within midcap IT, it would be a very stock specific approach, said Trivedi.