New-Age Companies To Offer High Returns, Says Dimensions Consulting’s Ajay Srivastava
With a few exceptions, traditional investment options have not given the returns that the market expected, he says.
New-age sectors and companies are the way forward for investors chasing high returns, according to Ajay Srivastava of Dimensions Consulting Pvt.
“The Indian economy has opened up so many new sectors and companies, which were not there in a traditional portfolio, and the option of investing into new companies has risen manifold,” Srivastava, managing director of Dimensions Consulting, told BQ Prime’s Niraj Shah.
Although they are currently expensive, investors must enter these new-age stocks during market correction to gain good returns, he said. With new-age companies such as Zomato Ltd. and Paytm (One97 Communications Ltd.), the Indian equity market offers many new choices as alternatives to the traditional portfolio, Srivastava said.
With a few exceptions, traditional investment options have not given the returns that the market expected, according to him. “Banks have stabilised and have given no returns, pharma sector has peaked out, and commodities and steel space have not given the expected returns.” But, the capital goods and defence sectors continue to do well, he said.
Outlook On Defence Sector
Defence companies offer opportunities as they are experiencing a demand cycle, Srivastava said.
“There have been phenomenal flows coming to the defence space because it is one sector that is totally underinvested.” The competition in this sector is very limited as well, he said.
The demand for such companies will keep rising as defence equipment needs refurbishing, maintenance, spares and replacement, and that is a virtual cycle for most companies, Srivastava said.
“With the current currency depreciation levels, India has no option but to develop indigenous defence equipment, which will further boost the domestic industry.”
Tide Turning For Specialty Chemical Stocks?
Underperformance in the specialty chemical stocks will continue due to lack of demand and surging oil prices, according to Srivastava.
“We have not seen any significant demand uptick in domestic as well as international space in any of the major chemical segments. Capacity expansions undertaken by the chemical companies and with the oil prices peaking up again, the margins can further come under pressure,” he said.
In India, the consumer segment would offer better returns than the front-facing domestic and industrial segment, said Srivastava.