Markets to give sizeable returns over five years: Anand Radhakrishnan

Stock market returns are likely to be more tempered this year, after the equity market rally in 2014, said Anand Radhakrishnan, chief investment officer at Franklin Templeton Investments India. The Indian market valuations also seem elevated as they are trading slightly above their long-term averages, said Radhakrishnan in an interview to ET. Private sector banks, industrial stocks, and consumer discretionary companies can provide good opportunities to investors going forward. Edited excerpts:

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Which sectors will outperform the markets in the near future?

We believe there are interesting opportunities in the financial sector. Private sector banks are gaining market share and growing faster compared to their state-owned counterparts. In general, private sector banks have also enjoyed higher levels of profitability and have tended to maintain better-quality balance sheets. We also believe a number of industrial stocks may be well positioned for a recovery in economic growth, and we see some interesting potential opportunities in that space. We have also added exposure to consumer discretionary companies, as with macro-economic recovery, the consumer sentiment will also turn positive. However, leaving out individual sectors, we expect that bottom-up stock selection is going to be key for generating alpha going forward.

Do you think pharma stocks have become over-heated after the recent run-up?

Valuations of Indian pharma stocks are closer to their highs and that is a source of concern. While many of them are scaling up and delivering good growth, there are near-term headwinds in terms of cross-currency fluctuations and USFDA regulatory overhang. Investors, at this point of time, do not mind overpaying for stability of earnings and predictability of growth, and that is leading to pockets of over-valuation.

https://economictimes.indiatimes.com/opinion/interviews/markets-to-give-sizeable-returns-over-five-years-anand-radhakrishnan-cio-franklin-templeton/articleshow/46818837.cms