Invesco Mutual Fund's Top Sectoral Bets For Investment

India is entering into a phase where it could potentially achieve a balance between reasonability and robust economic growth surpassing the levels observed in the previous five years, according to Taher Badshah of Invesco Mutual Fund.

The markets are presenting opportunities in areas which don't necessarily counter the same valuation, Badshah, the president and chief investment officer of Invesco Mutual Fund, told BQ Prime's Niraj Shah.

Certain investments benefit from stronger growth support or are influenced by structural trends, he said.

Public sector banks have exhibited stronger performance as compared with private sector banks over an extended period, Badshah said.

"...Apart from technicals, the fact that we were in a rising interest rate cycle and in that phase typically the public sector banks are at an advantage," he said.

Badshah expects a turn in the economic cycle for interest rates—if not in 2023, then in 2024. If it happens, the comparative appeal of private sector banks could increase, according to him.

Such a shift might not harm public sector banks, but rather, it could enhance the attractiveness of private sector banks, he said. This could be significant, considering the relatively subdued performance of private sector banks in recent times, Badshah said.

Among internet stocks like Zomato Ltd. and Paytm (One97 Communications Ltd.), there will be some that achieve substantial growth and eventually evolve into significant players in the developmental landscape, Badshah said.

Invesco Mutual Fund considers two key factors when evaluating such stocks, he said. Firstly, assess the competitive differentiation of a company as compared with its closest competitor, and whether the company can either widen or sustain that advantage over time. Second, they prefer not to see profitability too far into the future.

"We do not want to be into companies where we felt that the eventual profitability path is throughout ... In time, that makes it a little more difficult from the point of investing in public money," Badshah said.