Looking beyond the U.S.? One portfolio manager is bullish on India — naming 6 large-cap stocks
Investors have been looking beyond the United States, and one Asian country stands out, according to Malcolm Dorson, a senior portfolio manager at Global X ETFs. “Investors are now looking for international allocations, and their first stop has been India,” amid expectations of rate cuts in the United States, Dorson – who manages the Global X Active India ETF – told CNBC Pro on Aug. 24. Global X’s parent, Mirae Asset, is one of the largest foreign asset managers in India. “Indian stocks have been remarkable. We’re seeing participation in global market upside but really little participation in terms of downside. So risk-adjusted returns have been fantastic.” The BSE Sensex index — which represents 30 of the country’s largest and most traded firms on the Bombay Stock Exchange — is up around 14.6% over the last six months, while the benchmark Nifty 50 index is 12.8% higher as of Sept. 2. For comparison, the Nasdaq Composite is up around 10.5% over the last six months, while the benchmark S & P 500 index is around 11.6% higher. The spotlight on the South Asian powerhouse is thanks in large part to its “strong structural story and opportunities for growth and compounding in terms of valuations that have not really come down,” said Dorson. India is trading at around 22 times price-to-earnings — which the emerging markets portfolio manager acknowledges is “a slight premium to its historical average” of about 19 times. However, he remains bullish, as growth and profitability rates have been picking up. “From an investor’s perspective this justifies the slightly elevated multiples. The market is a touch on the expensive side, but it’s nothing crazy,” said Dorson. Dorson’s comments come even as the South Asian powerhouse’s economic growth slowed to 6.7% year on year in the April to June quarter , lower than the 7.8% logged in the previous quarter. Economists expect India’s economy to pick up in coming months amid easing inflation levels and a pick-up in government spending. Stocks to play Dorson is betting on large-cap stocks as a way to play the Indian market. Among the names he likes is real estate development company Prestige Estates Projects and the Tata Group-owned Titan Company , which manufactures jewelry and fashion accessories. Both companies, he said, will benefit from demand among the nation’s ultra-wealthy. Also on his radar is health-care group Apollo Hospitals , which he says is an “extremely attractive company” that is set to grow as demand for quality health care rises. Dorson has “built strong positions” in supermarket chain Avenue Supermarts , alcoholic beverages company United Spirits and consumer goods company Dabur India , all of which he says are set to benefit from a strong comeback in the consumer staples space.
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