Even as we have been complaining that capex is not happening, telecom infrastructure in India has been completely overhauled. Given the competitive pressures, the capex on telecom will go up, it has already been high by historical standards. The problem is that the areas where we need more capacity, like urban infra, are sectors where PPP is still in very primitive stages. A substantial portion India’s Gross Fixed Capital Formation is in real estate. So the real estate market needs to take off. Unless land prices come down, rental yields will not be meaningful and therefore real genuine demand, not investor demand, is not going to come. With that caveat, I think 75-100 basis points from now to March is likely. Unless there is a big shake up in medium term outlook for India, I see no reason why we should see a meaningful correction.
In my line of work, it does not pay to bet Nifty and Sensex. It is important for us to beat the index. From that perspective, I would continue to focus on low interest rates, metals, private sector banks and even IT. These are some sectors I would bet on to beat the index.