Nifty, Sensex No Longer Represent The Indian Economy, Says Hiren Ved
The Indian economy has entered a new cycle and stocks a new bull market, but the Nifty 50 and Sensex are no longer representative of the economy.
That’s according to Hiren Ved, chief investment officer at Alchemy Capital, which has more than Rs 4,500 crore worth of assets under management as of September.
It’s no more like the old saying that the markets reflect the health of the economy, Ved told BloombergQuint’s Niraj Shah in an interview, because the structure of the market is getting narrower and narrower at the top, both globally and in India.
“Even within the Nifty there is a significant concentration in the top 15-20 companies,” the fund manager said, and what happens to those few stocks is no reflection of the broader economy.
This has made it tough for people who run multi-cap portfolios to beat the index in the last one to two years, he said.
If you didn’t own Reliance which is now 15% of the Nifty, then you had a challenge on your hands.Hiren Ved, co-founder & CIO, Alchemy Capital
However, Ved acknowledged that large companies and conglomerates—be it Reliance Industries Ltd., the Tata Group or Asian Paints Ltd.—are expanding into newer segments and grabbing new business opportunities. Add to that major disruptions like demonetisation, the transition to the GST regime and now the Covid-19 pandemic, and the larger players are only consolidating their leadership position, he said.
We will continue to see [among] well run companies, the big becoming better and bigger.Hiren Ved, co-founder & CIO, Alchemy Capital
Among sectors, Ved recommended pharmaceutical companies and active pharmaceutical ingredient manufacturers that would benefit from the ongoing healthcare crisis and the diversification of supply chains from China. He also sees opportunities in speciality chemicals, electronics manufacturing and the information technology sectors.
Watch the entire conversation here: