Kotak MF expects strong earnings recovery; prefer large private banks

Harsha Upadhyaya, CIO-Equity at Kotak Mutual Fund on Tuesday said he believes that we will see a very strong earnings recovery.

“It makes sense to remain cautious; most of the positives have been well discounted. We are going to see a strong earnings recovery, the liquidity is also strong but if there is any negative which comes along, which is unknown at this point of time then these elevated valuations – we could see more volatility coming in,” he said in an interview with CNBC-TV18.

“Therefore, our suggestion would be to remain neutral in terms of allocation to equities and build a portfolio from a 3-5 year perspective,” Upadhyaya said.

Speaking about sectors, he said, “Most of the sectors, by rotation, have moved up. There could be some pockets where the valuations may not have reached the earlier peak levels, but I do not think there is any sector or any pocket that is very attractive from a valuation perspective. Therefore, it has to be more selective while building the portfolio.”

He, however, said that we remain invested in the IT sector but may not increase allocation. “We do have an overweight stance on private sector financials especially the banks, but we prefer some of the large private sector banks and these are the names where capital has also been raised. So to an extent, they are ready for the next level of growth,” Upadhyaya said.

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