Tridip Bhattacharya, the Chief Investment Officer (CIO) of Equities at Edelweiss Asset Management, has expressed optimism regarding the manufacturing sector’s performance in the coming five years. He specifically highlights the promising order books of capital goods companies as a key indicator for investors to monitor. In a conversation with CNBC-Awaaz on the market’s future outlook, Bhattacharya notes that the market currently resides in the fair value zone, with improving figures in terms of valuation and earnings growth. This situation presents a strong opportunity for profitable investments. He advises investors to focus on selected stocks rather than fixating solely on market indices.
Manufacturing Sector Optimism
Bhattacharya emphasizes the manufacturing sector’s potential for robust growth in the next half-decade, citing the positive outlook for the order books of capital goods companies.
Regarding the information technology (IT) sector, Bhattacharya remarks that price-to-earnings (PE) multiples have reached their lowest point, with varying levels of earnings across different companies. He notes that the calibration is still visible. Despite a 3-4 percent reduction in earnings for IT sector-related companies following the last quarter’s results, Bhattacharya suggests that IT stocks may experience pressure until the second quarter. However, he advises taking a longer-term perspective, spanning 12-18 months, as the IT sector is expected to rebound and perform well in the future.
Investment Strategy
Previously holding an underweight view on the IT sector, Bhattacharya now adopts a neutral to overweight stance, indicating a more favorable outlook. He mentions that as opportunities align with stock prices, they will increase their allocation to the sector.
Turning to the metal sector, Bhattacharya maintains a cautious view, describing it as underweight. He observes a reduced momentum in the global metal market. Instead, he suggests that the consumer discretionary sector presents more attractive opportunities for profit over the next 2-3 quarters, primarily due to anticipated margin benefits.
