Over the last 3 years, Indian macros have seen a remarkable improvement such
as shrinking of the twin deficits, acceleration in foreign exchange reserves, rupee
appreciation, etc. With low interest rates, equities continue to remain an
attractive asset class against fixed income, moving huge inflows in the equity
markets. As domestic inflows have continued to surge, Sensex has appreciated by
22% in the last two years and with our superior stock picking approach, Angels
Top Picks portfolio has continued to outperform Sensex with 54% returns in the
same period.
Sensex is currently trading at 18.8x of its FY2019E earnings which is ~8% premium to
its 10 year average PE of 17.4x. We believe that the Indian economy is primed for
sustained growth momentum with strong macros and improving rural economy. As
interest rates are likely to remain lower, equities will remain attractive asset class and
domestic inflows will be supportive of liquidity and valuations. We continue our
bottom-up stock picking approach and recommend stocks which will benefit from
affordable housing scheme, consumption pick-up, banking, etc.
