Mihir Vora’s Top Stock Picks In Virus-Hit Market
“The more we linger with this downturn, the more difficult it will be to return to V-Shape curve,” says Max Life’s Mihir Vora.
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Max Life Insurance Company Ltd.’s Mihir Vora sees companies in the telecom and IT sectors as top stock picks, at a time coronavirus infections in India jumped at the fastest pace in Asia.
“Given that we are coming off from a very troubling time for the [telecom] sector, and this is just the beginning of some kind of stability in pricing would mean that the sector in relative scheme of things would continue to outperform in the near term,” the director and chief investment officer at the insurance company told BloombergQuint in an interview. “We have seen the bottom of ARPU (average revenue per user) cycle.”
This combined with work from home and a surge in online streaming services of Netflix and Amazon Prime, among others, in the lockdown period is expected to continue, according to Vora. “Broadband connectivity and ARPU bottoming out can ensure that the sector outperforms the rest of the economy.”
The highly contagious pathogen has so far infected 1.18 lakh people in the country, making it the new epicentre for Covid-19 infections in Asia. And as more than a billion Indians remain confined to their homes and malls and multiplexes still shut, consumption of online content surged.
The S&P BSE Telecom Index has gained 17 percent this year, the most among the 19 sub-gauges compiled by BSE Ltd., as the lockdown has led to an increase in data consumption. Shares of Bharti Airtel Ltd. and Reliance Industries Ltd.—the parent of India’s largest telecom operator by subscribers Reliance Jio Infocomm Ltd.—have risen 19 percent and 6 percent, respectively, in the last one month. The ARPU of Bharti Airtel jumped to the highest in nearly three years, while that of Reliance Jio rose to the highest in six quarters.
Another sector where Vora is overweight is information technology.
“Global economy might rebound faster because of the stimulus packages and IT and auto components companies, which are export-led, may rebound a bit faster,” he said. “We are more global focused at this point because local economy might take a bit of time to rebound.”
Vora is also bullish on pharma and fast-moving consumer goods stocks.
Key Highlights From The Conversation
- More sanguine about the global situation than domestic because of the sheer size of monetary and fiscal stimulus that central banks and governments are doing in countries such as Japan and China.
- Global economy, especially developed nations, will do better in the short term, till the time people get confident that India will come back.
- Sharpness of economic contraction is very painful.
- More we linger with this downturn, the more difficult it will be to return to V-Shape curve.
- We are in it for a long haul now.
- One had great hope from the fiscal package, but it looks like most of the package is from liquidity support and not so much of a business support.
- The extent of lockdown and loss of business we have seen would mean many small businesses are under great stress and might have to shut shops in next few months.
Watch the full interaction here: