Saurabh Mukherjea, Founder, Marcellus Investment Managers shared his market and sector view on ET NOW. Mukherjea believes that 2023 will continue to bring good economic news, more foreign money and domestic flows. “I would not be surprised if the all-time high story “sustains” right through the next 12 months. I think the market should hit several all-time highs and also in these sorts of circumstances when you have an economic pickup and foreign money starts coming in the likes of HDFC Bank, Kotak etc.”
Despite the recent rally in PSU stocks, Mukherjea remains wary. “There are two reasons why we historically avoided PSUs and we continue to avoid PSUs. One is there is a fundamental conflict of interest, there is a tension inside the PSUs construct. The PSUs are owned by the Government of India and quite rightly therefore the PSU prioritises the interest of the nation over the interest of the shareholder. We think that is a perfectly valid imperative. The second aspect is if you look at the fundamentals of PSUs and take any PSU return on capital it tends to be significantly below cost of capital over extended periods of time which means the value creation engine is missing.”
In terms of recent additions to the portfolio, Mukherjea flagged Infosys. “We have historically had TCS which we continue to have and again I get very amused when I see brokers sort of say underweight IT or underperformance in IT is coming up because that is like saying take a short position in steam engines at the heart of the industrial revolution. So we have used the whole scepticism around IT and put Infosys in our advisory portfolios and we continue with that TCS holding in our flagship product.”
Defence is area where we are hoping that there will be some companies we could buy. “As India indigenises then we might get some local companies to actually make some money out of supplying defence to the armed forces in our country.”
