Birla MF Co-CIO Patil sees low teens 2018 growth for Nifty, likes auto, consumer durables, telecom:- 27 Jan 2018

Considering the government’s long-term vision, and the trend set through earlier budgets, the focus of the upcoming Union Budget is likely to remain largely on infrastructure and the rural economy, believes Mahesh Patil, Co-Chief Investment Officer-equities at Aditya Birla Sun Life Mutual Fund.

In an exclusive interview to Moneycontrol, Patil said that investors should not expect a repeat of 2017 in terms of returns, since the Nifty returned as much as 29 percent in the year. It is unlikely to happen again in 2018

We saw a good run up in 2017. How do you see markets panning out in 2018?

2018, as we step forward into this new calendar year, things are looking much better. A lot of things have fallen into place. Last year, we went through ups and downs. The economy took kind of a beating, but the gains of all the reforms would start to unfold and we are expecting a pretty good recovery back in corporate earnings.

Global outlook continues to remain fairly stronger than it was after the global financial crisis. So, all these tailwinds should continue to favour the markets. Since we did very well last year, the return expectations would probably have to be moderated down now because we are starting from a higher valuation level and to that extent, the market returns this calendar year would probably be muted compared to last year. But still, our view is that returns should be fairly good for investors to look positively at equities compared to any other asset class.

According to your presentation GDP, growth will be more than 7 percent in FY19. Is that achievable?

Yes, it is fairly achievable because the growth was pulled down because of reforms. We are seeing some recovery in capital expenditure, at least private sector capex will slowly start to pick up, though not in a big way. But at least the lower end will and rural consumption is moving up. Global growth is also fairly strong. So, even the net exports should be fairly good. So 7 percent GDP growth, considering all these factors, should quite be possible.

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