Jefferies’ Mahesh Nandurkar Chooses Themes to Boost Economy and Profit Growth

While corporate profits and GDP growth will hold up, it will not spill over into every corner of the stock market, according to Mahesh Nandurkar.

As various macroeconomic indicators suggest that the Indian economy has entered a supercycle, investors should be careful about which themes and trends to invest in, said equity analyst at Jefferies India Pvt.

“My view on the markets remains tempered as I believe the price / earnings ratios will suffer some depreciation,” he told BloombergQuint’s Niraj Shah in an interview. “But among the major economies over the next two years, India will be the only country to have a double-digit nominal GDP growth rate. This will help us stand out and attract additional capital.

To ride the GDP wave, Nandurkar is betting on economic cyclics, such as industry and housing.

“There is room for the beneficiaries of investment spending, including manufacturers,” he said. “My feeling is also that housing has already been a big story and has only entered the second year of a recovery that will last 7 to 8 years.”

Nandurkar said he was overweight housing and related themes as the sector will lead the cycle of capital spending. “A larger investment cycle usually follows the real estate cycle with a lag of six to eight quarters,” he said. “Four have passed, so a larger investment cycle is coming and by the second half of 2022 we will see it pick up.”

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