AK Prabhakar, Senior Vice President (Equity Research), Anand Rathi spoke to Surabhi Roy on global markets and attractive sectors
The Nifty slipped below the 5,000 mark earlier this week given the uncertainties on the global front and the weakening Rupee. How should one play this market? What are you advising your clients?
The market looks weak on multiple concerns, as politics has taken centrestage from slowing growth around the globe and in India. The Finance Minister has deferred Foreign Direct Investment (FDI) in the insurance sector, which is a clear case of policy logjam.
On the other hand, the Reserve Bank of India (RBI) is taking measures to keep Rupee strong, but we have to wait to see if things work as the options are running out. We still advise 30 – 40 per cent cash holding. One should follow a stock specific approach as a major correction cannot be ruled out.
What are your Sensex / Nifty targets for the year end?
The year-end target for Nifty is around 4,600-4,800 and for the Sensex it is around 15,600 – 16,100 levels.
Defensive sectors like FMCG and Healthcare are back in limelight. Should one start taking positions in these sectors?
FMCG and Healthcare are looking good in an overall weak market. Hindustan Unilever (HUL), Emami, Ipca Lab and Glenmark Pharmaceuticals are a few stocks that we still like in this space.
We have seen extreme disparities within a sector during Q4 results. Do you think this trend will continue in the coming quarters too?
Yes, I feel results to be subdued for next one – two quarters with lot of disparity. The results of public sector (PSU) banks results have disappointed.
Which are your top three picks among Bank, Auto and Infrastructure sectors?
All three sectors are in big correction mode and the respective indices can drift 10 – 15% lower from the current levels. I would advise buying in Canara Bank, Allahabad Bank, Karnataka Bank from the banking space; Maruti Suzuki, Mahindra and Mahindra and Tata Motors in the Auto pack; National Buildings Construction Corporation, IRB Infra and IVRCL look good in the infrastructure space.
What is your outlook on the mid-and small-cap spaces? Do you find value in any of the stocks from a medium-term perspective?
Castrol, Rallis Indua, Coromandel, Gujarat State Fertilizers & Chemicals, Mahindra Holiday, MOIL and NMDC are few picks which interest us from a medium-to-long term perspective.
What is your outlook on the Rupee given the recent RBI intervention / directive?
We strongly feel that it will touch 56-57 levels against the dollar in the near-term. The foreign fund outflow and delaying GAAR by a year does not really solve the purpose. Given the weakness in the rupee, I feel there is more downside risk to the equity markets.
The Nifty can slip to 4,500 levels if the INR was to slip to 54 levels. As regards specific companies / sectors, the rupee-dollar equation will prove beneficial for the pharmaceutical companies and textile companies because of their export oriented nature. Importers will be impacted negatively.
The Nifty slipped below the 5,000 mark earlier this week given the uncertainties on the global front and the weakening Rupee. How should one play this market? What are you advising your clients?
The market looks weak on multiple concerns, as politics has taken centrestage from slowing growth around the globe and in India. The Finance Minister has deferred Foreign Direct Investment (FDI) in the insurance sector, which is a clear case of policy logjam.
On the other hand, the Reserve Bank of India (RBI) is taking measures to keep Rupee strong, but we have to wait to see if things work as the options are running out. We still advise 30 – 40 per cent cash holding. One should follow a stock specific approach as a major correction cannot be ruled out.
What are your Sensex / Nifty targets for the year end?
The year-end target for Nifty is around 4,600-4,800 and for the Sensex it is around 15,600 – 16,100 levels.
Defensive sectors like FMCG and Healthcare are back in limelight. Should one start taking positions in these sectors?
FMCG and Healthcare are looking good in an overall weak market. Hindustan Unilever (HUL), Emami, Ipca Lab and Glenmark Pharmaceuticals are a few stocks that we still like in this space.
We have seen extreme disparities within a sector during Q4 results. Do you think this trend will continue in the coming quarters too?
Yes, I feel results to be subdued for next one – two quarters with lot of disparity. The results of public sector (PSU) banks results have disappointed.
Which are your top three picks among Bank, Auto and Infrastructure sectors?
All three sectors are in big correction mode and the respective indices can drift 10 – 15% lower from the current levels. I would advise buying in Canara Bank, Allahabad Bank, Karnataka Bank from the banking space; Maruti Suzuki, Mahindra and Mahindra and Tata Motors in the Auto pack; National Buildings Construction Corporation, IRB Infra and IVRCL look good in the infrastructure space.
What is your outlook on the mid-and small-cap spaces? Do you find value in any of the stocks from a medium-term perspective?
Castrol, Rallis Indua, Coromandel, Gujarat State Fertilizers & Chemicals, Mahindra Holiday, MOIL and NMDC are few picks which interest us from a medium-to-long term perspective.
What is your outlook on the Rupee given the recent RBI intervention / directive?
We strongly feel that it will touch 56-57 levels against the dollar in the near-term. The foreign fund outflow and delaying GAAR by a year does not really solve the purpose. Given the weakness in the rupee, I feel there is more downside risk to the equity markets.
The Nifty can slip to 4,500 levels if the INR was to slip to 54 levels. As regards specific companies / sectors, the rupee-dollar equation will prove beneficial for the pharmaceutical companies and textile companies because of their export oriented nature. Importers will be impacted negatively.
