Nischal Maheshwari Bets on PSU Banks, Flags Microfinance Reset as Structural Positive
In a recent discussion with ET Now, market expert Nischal Maheshwari spotlighted the opportunities in various sectors, particularly emphasizing Public Sector Undertaking (PSU) banks and the transformative changes in microfinance. Emphasizing a tactical approach, Maheshwari advised investors to adopt a selective and valuation-conscious strategy across a range of industries.
Key Insights from Nischal Maheshwari
– Autos as a Relative Outperformer:
– Maheshwari identified the auto sector as one of the few bright spots in a generally gloomy market.
– He asserted, “Autos will be the top bet at the moment,” indicating a positive outlook for investors seeking growth.
– Microfinance’s Regulatory Reset:
– Renewed interest in microfinance is driven by recent state-level legislation, reflecting the sector’s significance and its inherent challenges.
– Maheshwari commented, “This signals how important microfinance is in the states,” noting its crucial role in supporting MSME and lower-ticket economies.
– He also raised concerns over over-lending, stating, “There are huge issues with multiple loans… people are giving more loans to the same borrowers, leading to defaults.”
– The new restrictions limiting borrowers to two loans could prove beneficial, with Maheshwari believing that these adjustments will help stabilize the industry.
– Strength of PSU Banks:
– Maheshwari highlighted that PSU banks are currently outperforming their private counterparts. He stated, “PSUs continue to outshine… valuations are much cheaper,” noting comparable growth and asset quality.
– He attributed ongoing market volatility to foreign institutional investor (FII) flows, particularly in IT and banking sectors, where recent selling has occurred.
– Navigating the Metals Sector:
– He urged agility within the metal sector, suggesting that “one year is too long a call” due to global volatility.
– While non-ferrous stocks may appear stagnant, he pointed out that “ferrous looks interesting” in the short term, with steel presenting better opportunities.
– Positive Outlook on Commercial Vehicles (CV):
– Maheshwari acknowledged early recovery signs in the CV market, while remaining cautious about capital expenditure trends.
– “CV seems to be in a good spot;” however, he noted that private capex remains subdued. He emphasized, “The five-year fleet renewal is approaching, and replacement demand will be strong.”
– Energy and Defence Insights:
– In the energy sector, Maheshwari sees potential in upstream PSUs like Oil India and ONGC amid geopolitical risks, while advising caution regarding Oil Marketing Companies (OMCs).
– Regarding the defence industry, he advised investors to exercise restraint, stating, “While the outlook is good, it’s already getting priced in.”
Conclusion
Nischal Maheshwari’s insights shed light on strategic opportunities within the market, particularly focusing on PSU banks and the reformed landscape of microfinance. As he concluded, while challenges exist, investors who remain tactical and selective can navigate the complexities of the current market landscape, making informed decisions that leverage structural positives, particularly in key sectors like banking and microfinance.