Sectors Axis Mutual Fund’s Jinesh Gopani Favours As Market Heads Into ‘Good Cycle’

Sectors like information technology, pharmaceuticals and speciality chemicals have opportunities to gain further as Indian equities head into a “good cycle”, according to Jinesh Gopani.

“Strong balance sheets, companies having a strong management and ability to take difficult or tough decisions during these times will show how the company comes out of this crisis across sectors,” the head of equities at Axis Mutual Fund told BloombergQuint’s Niraj Shah in an interview. He said these sectors are cash-rich, have incentives and are in a position to scale up.

Gopani said things will look “much better” for the Indian markets in the December quarter following the festive season that drives a bulk of sales. He, however, said it is important that the Covid-19 outbreak—and the number of viral infections—subsides by then.

When asked about his stock-picking approach, Gopani said: “We have a very bottoms-up approach and we’re not looking at large cap, mid cap or small cap. Any company which is manoeuvring through this pandemic well will have a disproportionate profit pool and valuation.”

Gopani’s view on various sectors:

• Information Technology: Gopani said Indian IT comprises cash-rich companies and have the ability to pay dividends and conduct share buybacks. With an added ability to improve return on equity, the sector will bounce back, he said.

• Pharmaceuticals: The sector should continue to do better as their near-term numbers look good. Pharma is among the sectors at the forefront during this pandemic, making it attractive.

• Speciality Chemicals: Speciality chemicals along with API manufacturers and agrochemical makers are in a better place to grab opportunities, he said.

• Automobiles: Gopani said there’s ample opportunity with skilled labour force and a good supply chain already in place. He said all the sector needs is further incentives.

• Financials: This sector, according to Gopani, gives a better picture of the economy. Just because a few top private banks and NBFCs are showing signs of revival, it doesn’t mean the sector is reviving. Companies with good managements and balance sheets will come out with huge market share gains, he said.

Gopani said companies with good balance sheets and managements and the ability to take difficult decisions will be able to propel themselves out of this crisis.

He, however, said there’s “huge legroom” for automobile, insurance and asset managers to gain market share, adding foreign firms would enter India and set up base under the Aatmanirbhar Bharat scheme.

Watch the full conversation here: