Expediting GST Implementation Would Be Icing On The Cake: Ritu Arora

Ritu Arora, Chief Investment Officer, Canara HSBC OBC Life Insurance shares her views on the big ticket reforms which are expected from the first budget.

Which are the big ticket reforms that you expect from the first budget of the newly formed NDA government?     
The Fiscal Budget 2014- 15 is much awaited.  We would like the government to enumerate measures of how it proposes to achieve the tough balancing act between cutting fiscal deficit and reviving investments. It is also important to bring small savings back to financial markets. Expediting GST implementation would be icing on the cake.

Which are the sectors you are currently betting upon?
We believe that over the last quarter a directional shift has taken place in the economy and the markets and the worst is behind us. Indications are of a strong economic recovery over the next few years and we are positioning our portfolios towards domestic cyclical sectors to benefit from this growth recovery. We like stocks in the Financial services, Automobiles, Infrastructure and construction and Oil & gas sectors and believe that there is good return to be made from a longer term perspective.

3. Would you like to put any numbers for the Sensex for CY14?
Indian equity market has moved up sharply in the near term generating more than 20% return since Jan 2014. The earnings growth of companies however, remains sluggish with a meager 10% profit growth in Q4FY14. Profit growth recovery may not happen in a hurry and is expected to grow around 12% only for FY15. Valuations in the mean time have moved above long term average level at 17x FY15e earnings. There is, however, a directional shift in the economy and the markets and the worst is behind us. Odds in favor of economic recovery are stronger now than before and handsome CAGR returns can be expected over the next 5 years. Though, within short term the equity markets have moved up sharply and we feel that further appreciation will be gradual.  Markets should generate handsome double digit CAGR over next few years.