A $10 billion asset manager’s top sectoral bets for next 5 years

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MUMBAI: Bajaj Allianz Life Insurance’s Chief Investment Officer Sampath Reddy says the next three-to-five years could belong to the ‘old economy’, not the brand new one.

The fund supervisor, who takes care of property price near $10 billion, sees the engineering and manufacturing sector because the place to be in contrast to the widespread notion of betting on ‘new economy’ sectors like Internet and shopper know-how.

“I think from a three- to five-year perspective, one could pick a few stocks from the general manufacturing, power, metals and engineering sectors,” Reddy informed ETMarkets.com in a digital interview.

Reddy is relying on the Indian capital expenditure to return again roaring from its deep slumber of almost a decade. For occasion, within the metals house, Reddy believes lack of funding in new capability mixed with the return of robust world demand could preserve commodity costs elevated for a while to return.

Stocks from the home manufacturing and commodity sector have seen a powerful rally since late 2020, as easing pandemic restrictions in most superior economies and China’s efforts to curb air pollution have resulted in a breakneck surge in costs of all the things from metal to zinc to copper.

The Nifty Infrastructure index has risen 16 per cent to this point this yr, whereas Nifty Metal index has gained 56 per cent in the identical interval in opposition to a 9 per cent rise in Nifty50.

Nifty50’s comparatively lukewarm efficiency has been a perform of buyers dialing again optimism for the economic system within the face of a extreme second wave of Covid-19 infections and a struggling vaccination drive by the federal government.

While Reddy’s optimism on the cyclical sector is steely, he believes defensive sectors are nonetheless providing the cheap costs within the ongoing grind of the blue chips.

“The key sectors that we like and have overweight exposure to are IT services, FMCG, healthcare and diagnostics,” the asset supervisor, who has spent over a decade on the life insurer, mentioned.

Reddy doesn’t see a lot danger to company earnings from the second wave of the infections, however is anxious that one thing nasty is perhaps staring world equities on the horizon. Reddy says as the worldwide economic system recovers to its pre-pandemic ranges, “we may see some guidance or action from the major central banks regarding rolling back some of the massive monetary stimulus”.

“In that event, we may see some volatility in global markets including India, as abundant liquidity is what has been supporting this rally,” he mentioned.

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