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    Three sectors to emerge as midcap stars in a year from now: S Krishna Kumar, Sundaram Mutual Fund

    Synopsis

    Midcap investing broadly is more about identifying emerging trends, emerging opportunities in a growing economy like India

    ET Now
    In a chat with ET Now, S Krishna Kumar, Head-Equity, Sundaram Mutual Fund, says look out for microfin, agi-chem and specialty chemicals for growth in near future. Edited excerpts

    ET Now: I am looking at your portfolios; it has got a mix of speciality chemical companies, textile companies, a bunch of others within your two or three funds as well, how are you approaching mid-cap investments right now?
    S Krishna Kumar: If you look at mid-caps, broadly they are in a lot of emerging businesses. Over the last couple of decades you can see that in India we have had several changes driven by regulatory agencies, government policies like in the case of environment pollution, evolution of city gas networks, evolution of more sophisticated automotive emission systems and braking systems etc.

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    These are all new areas where new business opportunities have been created and they have enjoyed high growth post those changes. Similarly, if you look at changes in demographics around us, with income levels going up and changing lifestyles, there are several needs which have come up creating a demand for new products and services. Clearly the entertainment industry, the multiplexes, branded apparels are some of the large new businesses which have come up.
    So midcap investing broadly is more about identifying emerging trends, emerging opportunities in a growing economy like India where there are a lot of changes happening around you brought in by several factors which I mentioned.

    Another one probably we could consider is the healthcare space in the country. You know with 125 crore Indians, the per capita ratios are bad and the only way this industry can grow is to grow very secularly and create a lot of value for its own investors and stakeholders. A lot of companies both in hospital and clinical care have come out with IPOs. A lot of companies which have been PE funded or venture capital funded are coming out into the public listed space and providing opportunity for investors to participate through mutual funds and public markets. So I think the whole base of midcap is to be more of a growth investor, capture the growth that is happening across emerging sectors in the Indian economy.
    ET Now: What are the newer pockets? The entire year has been about NBFCs, PSU banks have started moving now. We have seen softer commodities like tea, coffee, sugar which have been moving up very smartly. Are there any newer areas which could be the stars when one talks about midcaps say a year from now?
    S Krishna Kumar: I think one of the biggest emerging segments in the last two years has been the opportunities in the microfinance and the small finance banks. Clearly, I think with financial inclusion taking off in a very strong manner, there is a huge opportunity for smaller microfinance companies, small finance banks and also the rural oriented NBFCs to do well over the next five to ten years. That is a big space I think we are closely watching.

    Also, the Indian agrochemical or the farm input industry should be followed. You would notice that we have hardly a couple of billion dollars in size despite the size of our economy and the agricultural area. So with better realisation from produce etc and better awareness levels farming is going to really take off in a big way in terms of better use of better inputs, hybrid seeds, agri-chemicals, micronutrients, there is a huge emerging opportunity where the agri-chemicals and seeds sector would do pretty well.
    Specialty chemicals again have a lot of linkages to the space and I would probably classify specialty chemicals also into this broader space. I think that is just another big area where India’s competitive advantages in terms of chemical synthesis would come to the fore so that is a big space that we are watching at this point in time.




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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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