Why this investment veteran believes the risk-reward in large-cap stocks is better and remains bullish on industrials

Nimesh Chandan, chief investment officer at Bajaj Finserv Asset Management, said the risk-reward ratio in large-cap stocks has improved in recent months.

The 22-year veteran investment expert expects profit growth of 20% in FY24 and 14% in FY25. “This is very healthy growth on top of the good growth rate in FY24,” Chandan said in an interview. money control.

Chandan said he believes the risk-reward relationship is most favorable in the financial sector, especially private banks. “Capex-heavy sectors such as industrials and infrastructure are expected to continue their growth trajectory given strong orders.”

The conversation with money control We have made progress…

Do you think it’s time to reduce your exposure to mid- and small-cap stocks and shift your focus to large-cap stocks?

First, a company’s market capitalization tells us nothing about its potential to generate wealth in the future. However, it does tell you about liquidity and the potential volatility of a company’s stock price. Unfortunately, the audience is all about the small-cap category as a whole. This leads to mispricing of many securities at the top of the market as well as in the tank of the market.

Market participants were very excited about the small-cap rally last year as well. Therefore, we can see that large-cap stocks have a better risk-reward ratio over the past few months.

Do you think revenue growth will be strong in FY25?

Growth is expected to be approximately 20% in FY24 and 14% in FY25. This is a very healthy growth in addition to a good growth rate for FY24. Export-oriented sectors are likely to experience reverse growth. Short-term profits are likely to be determined by capital investment.

The biggest bet heading into the next financial year is…

We believe that risk and reward are favorable in the financial sector, especially in private banks. Capital investment-heavy sectors such as industrials and infrastructure are expected to continue on a growth trajectory given strong order intake.

Within consumer discretion, cars continue to benefit from premiumization trends. Other discretionary sectors are likely to recover around the next Christmas season. Early signs that the monsoon will normalize next year will help revive the rural economy.

Do you think the market is being cautious ahead of the election? Could we see a major correction later this year?

Stock prices are often undervalued during general elections. Negative surprises can cause sharp reactions. When it comes to corrections, as Robert Shiller says, “Bull market corrections come like thieves in the night.” It is difficult to predict when.

Will we see a recovery in commodity prices?

If we see a recovery in China’s economy and an unexpected slowdown in the US economy, commodity prices could rebound. However, we do not assign a high probability to this scenario.

Inflation is likely to be moderate in 2024, and interest rates are expected to fall globally. India has many diverse sectors that contribute to revenue growth. Therefore, we do not expect a similar material impact on our FY25 earnings.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not the views of the website or its management. Moneycontrol.com advises users to check with certified professionals before making any investment decisions.