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‘Returns from benchmark indices will diverge significantly from stocks’

The Hindu Business Line, Jul 28, 2016

In 2016 as well, returns from the benchmark indices will diverge significantly from individual stock returns, according to private wealth manager Sanctum Wealth.

This is a continuance of the trend last year when the indices have negative returns, while specific stocks still returned profits to investors.

However, valuations of such stocks may still be steep, Sunil Sharma, Chief Investment Officer, said in a press conference.

“The index is valued at 23-24 times trailing earnings, and we’ve seen this lead to corrections in the past.” But India offers stellar growth options while being valued on par with markets like the US, and in a world with high valuations in general but low growth potential.

A report by the wealth manager added that suppliers of cement, transportation, financing, construction equipment and building materials are waiting in the wings to emerge as big winners as infrastructure improves across the country.

“As the global village shrinks, Indian companies are extremely well-positioned to gain market share from global markets in healthcare, textiles, speciality chemicals, consumer goods and information technology,” the report added.

As possible investment avenues for the public, Sanctum recommended mutual fund schemes like Motilal Oswal MOSt Focused Midcap 30 Fund, Mirae Asset Emerging Bluechip Fund, ICICI Prudential Focused Bluechip Fund, UTI Transportation and Logistics Fund and IDFC Infrastructure Fund.