Why Max Life’s Mihir Vora Says India’s Small, Mid Caps May Bounce Back In Two Years
“If at all we are going to see any pickup in FDI, export-linked themes, it has to be in the non-nifty stocks,” says Mihir Vora.
India’s broader equity market may bounce back in the next two years as the country attracts more foreign investments and expands its export sector, according to Max Life Insurance’s Mihir Vora.
Inflows of foreign direct investments can pick up over the next 24 months since investors have a limited window to take advantage of the 15 percent tax rate announced for domestic manufacturing companies, the director and chief investment officer at the life insurer said.
To attract investments in the manufacturing sector, new companies incorporated on or after Oct. 1, and start manufacturing by March 2023, will pay tax at 15 percent, Finance Minister Nirmala Sitharaman had said last month while announcing the corporate tax rate cuts. The effective rate for these companies would be 17 percent, including surcharge and cess. And they would also not have to pay the minimum alternate tax.
“If at all we are going to see any pickup in the FDI, export-linked themes, it has to be in the non-nifty stocks,” he told BloombergQuint, as many segments such as oil and gas, chemicals, real estate are not represented in the NSE Nifty 50 Index.
Also, with the Reserve Bank of India cutting interest rates for the fifth time in a row and companies deleveraging, small and mid caps stand to gain, Vora said. “We’ve already seen a lot of pain in the mid- and small-cap segment,” he said. “The fact that interest rates are coming off, impacts the mid- and small-cap stocks the maximum because interest cost-to-profit after tax is the highest for the smaller companies.”
Watch | Mihir Vora On Pockets Of Equity He Is Bullish On