Banks, it to Defense: Dr. Vikas Gupta of Omniscience Capital List sectors that can make wealth creators over 3-5 years | Einsmark news

Dr Vikas Gupta, CEO and Investment Strategist at OmnisCience Capital, believes that several sectors in India show tremendous investment opportunities, with banking, IT, logistics, defense and power, among other sectors that create in wealth over the next few years. At the index level, he sees things that are in line with the exclusive recovery of earnings possible. However, for index investors in the middle and small cap, he advised him to be careful because these indexes were overvalued. Edited Extracts: Faded Trade War Tensions, Geopolitical Worries and Inflation -All: It seems things come together for the Indian stock market. The missing piece is the earnings recovery. How long do you think before we can expect the part to fall into place? As the different factors that cause uncertainty come from, earnings growth remains the most important factor that determines future market direction. Ideally, we should not focus on the earnings at index level, but rather focus on specific sectors and their earnings growth. For example, for the Nifty 50, after financial services, IT and Oil & Gas are the biggest contributors. It may take more time to recover. Oil and gas are very dependent on volatile global market prices of crude oil. So these types of draws make the Nifty 50 earnings growth slightly challenging. Nevertheless, we expect a double-digit growth in earnings for the Nifty 50 this year. Maybe, the second half, we should see some predictability. Regardless of the heading level index earnings, several industries are doing very well and shows a steady growth. A recent report suggests that the ownership of DII has risen to 19.2%, while FIIs’ dropped to 18.8%. Still, FII money seems to be the driving force. Why is it? The increase in the DII ownership reflects the consistent award via SIP and lump sum by Indian retail investors to mutual funds through up and downs. The influx of the mutual fund continued despite the markets falling from September 2024 to February 2025. During this period, the FIIs sold and bought DIIs, which increased the DII ownership of FIIs. The influx of Indian investors continues. Now, however, the FIIs have started to return, which is why the markets are responding, as both DIIs and FIIs compete to invest in the markets, and so the extra FII money is pulling up the markets. Eventually, if the FII money continues to flow, they can start taking their ownership. Nifty PSU Bank index rose almost 15% within 2.5 months. What do you think is behind this trend? Are PSU bank shares still worth considering? Nifty PSU banks trade at a PE of 7. It is exceptionally low and shows that PSU banks may be available at strong discounts on their intrinsic values. In fact, according to the scientific investment framework, banks, especially PSU banks, have strong balance sheets with low NPAs and unused lending. As lending is utilized as a result of a strong demand for capital from the Government of India’s Capeex in infrastructure, corporate hood requirements and household capital demand for housing and durable consumers, the return on the equity of banks must increase faster than growth in assets. Thus, the growth of strong earnings is driving. A revival of the PSU banks to even 10-15 PE on acceleration of earnings should cause great value in the investor portfolio. The risks would be a slower demand for capital. The risk of increasing NPAs looks low in the next few years. What do you think is the investment theme that would appear as the wealth creator over the next few years? Our scientific investment framework has thrown up several promising growth lectors that can be wealth creators over the next 3-5 years. These are growth lecturers with double-digit growth rates over the next 5-10 years or longer. However, these companies are available at great discounts for their intrinsic values. We have already discussed PSU banks and banks in general. Banking is one of our strongest, most promising themes. Second, we see a strong opportunity in the housing financing segment. Another strong growth sector is power. In addition, we believe that logistics would be one of the unexpected growth lecturers. Once the US economy is going to establish, we should expect profits from the AI-related demand. However, it may take a few years to manifest. We are also optimistic about the view of India as a global manufacturing center with make in India. We are also excited about the space for commercial services. Also, remember that the defense, as highlighted by Operation Sindoor, is a multi-decadal theme for India, but one has to be careful on the valuation front in terms of defense companies, and they must be selective or their investment universe to broaden other dimensions of defense outside arms and ammunition to economic warfare, strategic materials, strategic materials and a long time. The latest leg of the rally has seen that broader markets are better than the Sensex and the Nifty. Do you believe that the current market environment is conducive to the purchase of mid -cap and small cap? With the Indian Big Capitization space defined as the top 100 shares and MidCaps as the next 150 shares, it is a relatively small universe to choose shares. On the other hand, there are 1000s of shares in the small cap space. Of course, the likelihood of finding investment opportunities in the small cap space is higher. However, as discussed earlier, banks and power companies are mostly large and Midcaps. Housing financing, logistics, manufacturing and commercial services are mostly small hoods. Railways and defense companies are across the capitalization spectrum. So one can find opportunities in large as well as small Caps these days. But we will be careful the index of investors in the middle and small cap and small capeisation as these indexes are overvalued. However, if one creates an active portfolio, there are opportunities. But one has to stay away from the popular businesses and use a well -designed investment process, similar to the scientific investment framework we follow. It helps to protect our portfolios of capital destructors (poor balance sheets/loss-making businesses), capital irregulars (companies with no Moats) and capital inploders (overvalued companies). Chemical segment has been on the back foot for some time. Do you see a recovery soon? We are not too focused on the chemical sector because there is a strong dependence on crude oil, China and global demand supply factors. These factors make it very difficult to have confidence in their turnover and growth in earnings. Currently they are not on our radar. Disclaimer: This story is for educational purposes only. The views and recommendations above are those of individual analysts or brokerage companies, and not of currency. We advise investors to check with certified experts before making investment decisions.