Mega Caps Offer Value, But India's Story Unfolds Elsewhere: ITI AMC's Rajesh Bhatia

Maga-cap companies may deliver robust equity-type returns given their value in the market, but the essence of the Indian story lies elsewhere, according to ITI Asset Management Co.'s Rajesh Bhatia.

The Indian story unfolds beyond these companies in sectors such as defence, power, electronic manufacturing services, and real estate, which are not dominated by mega-caps, Bhatia, chief investment officer at ITI AMC, told NDTV Profit.

The market's breadth is commendable, with numerous opportunities experiencing upward momentum across various sectors, he said. "The participation of multiple sectors indicates a high-quality market that is not expected to diminish rapidly."

India is experiencing momentum of its own; "it's like Newton's law," Bhatia said. "When momentum builds, it necessitates an opposing force to halt it." Thus, there is a possibility that the emerging risk factors could act as a counterforce, potentially interrupting the current momentum that markets are witnessing, he said.

However, even if a correction occurs given the high valuation, it will be a multi-year phase, Bhatia said. "The next five or 10 years will witness the unfolding of the story in these sectors."

India, over a three, five, seven, and 10-year period, stands out as one of the most predictable opportunities, a characteristic that endures, Bhatia said. The genesis of this predictability can be traced back to the fiscal expenditure on capital initiated by the central government of India in response to the Covid crisis, he said.

The governmental response translated into investments in critical sectors like roads, railways, defence, power, and the ignition of a real estate cycle, he said.

An extreme level of comfort is derived from India, indicating the anticipation of a secular trend that is expected to sustain a structural growth rate over the next three to five years, Bhatia noted.