Mihir Vora, CIO, Trust Mutual Fund, says “the hope is that the second half of the year will see a back-ended, faster victory than expected. While the government is expecting 7% GDP growth, I would work with a 6.5-7.7% range in an optimistic scenario. There are lots of moving parts and there is some element of optimism on GDP growth already being built into the market. If that does not pan out in the second half of the year post-election, then we might be in for a little bit of stagnation or correction in the market. There will continue to be opportunities to pick stocks.”

There is a lot of overlap in the market, is it not?
Mihir Vora: Yes. I think the problem is that global markets are all over the place and they are so schizophrenic. One day they are worried about recession in the US and the other day they are worried about inflation. You cannot have inflation and recession at the same time, not theoretically. So, they are behaving like headless chickens at some point in time, especially the US bond markets. That is creating a little bit of concern about the global situation. So, right now, we are being more stock specific, rather than taking big macro calls. It is one of the toughest environments to take macro calls.

What is next for the market? Everyone thought that the election would be a swing event, which it may not be. Everyone thought that the earning season will tell us which way the economy is headed. I am trying to understand for the rest of the year now, what’s next?
Mihir Vora: The hope is that the second half of the year will see a back-ended, faster victory than expected while the government is expecting 7% GDP growth. There is a range that I would work with, 6.5-7.7% will be an optimistic scenario. There are lots of moving parts and there is some element of optimism on GDP growth already being built into the market. If that does not pan out in the second half of the year post-election, then we might be in for a little bit of stagnation or correction in the market. Stock specific, of course, there will continue to be opportunities to pick stocks. But, a broad-based rally needs to have a broad-based recovery which is still a question mark right now.

When you will start managing public money, what will you start buying in the fund the minute the fund opens for inflows?
Mihir Vora: Sure. So, the view broadly remains the same. While we are talking about a range of 6.5-7% in terms of GDP growth, we are saying that 7% may be a bit optimistic. But the fact is that India will be a superior economy in terms of growth compared to the rest of the world. So, most of the sectors that we are bullish on are domestic, especially sectors where we are talking about the next 3 to 10 years of runway of growth, where we are talking about more domestic manufacturing, more infrastructure, power infrastructure, road infrastructure and other assets like port etc.

So, essentially the domestic investment theme and then as and when domestic consumption picks up, then the domestic consumption theme also. And this of course has to be aided by the financial sector because without financials going, you cannot see growth in credit in most of the other sectors. We will stick to certain segments like the ones which we have discussed in the past, like the outsourcing from China in chemicals, pharmaceuticals, machinery, defence. Those are multi-year themes that we will be playing off. It really does not matter when we launch the fund. At any point in time, we would be biased in these themes.

If I look at the excitement in PSUs, how much of that is real and how much of that is euphoria?
Mihir Vora: I would look at it segment by segment. For example, there are a few in the financial space and some maybe in the infrastructure space also where they are trading at quite high valuations. It is just because of low floatings. So, be very careful about that. The energy pack and the defence manufacturing pack are still reasonably valued because of the potential. The energy pack is achieved in absolute terms. So it is a whole range out there. There are very highly speculative pockets and then there are more reasonably priced pockets based on the growth potential. So I would still be picky. I do not think it is a, you know, I can make a statement that the whole sector is cheap or the whole pack is cheap or expensive. You really have to look at it stock by stock.

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