Mkts to stay lacklustre in short term: Deutsche AMC

Excerpts from CNBC-TV18’s exclusive interview with  Aniket Inamdar:

Q: Are you circumspect given the kind of news flow that you have been hearing around the market or do you think these are good levels to buy?

A: In the near term situation, there have been a lot of negative news flows mostly about the high oil prices, slowdown in GDP and slight subsidy levels. The markets have factored quite a lot of negative news in the sense that the valuations of many stocks are down sharply. Now considering that the quality stocks can compound earnings at 15% to 20%, one must focus on the long term. The near term looks lacklustre and there are a lot of negative news flow, but finally it’s all about valuations and growth. The long term investors should focus on that rather than get swayed by the negative news flow currently.

Q: At this point, what kind of range are you working with for this market, because the call has become louder for the Sensex and Nifty to go back and test their March lows?

A: As part of our fund management process, we don’t really focus on what the near term level would be. In fact we don’t even take cash calls to any significant measure and we stay fully invested. There might be some negative news flow in terms of sustained high crude and high fertilizer prices and so on, but I would say that the near term looks lacklustre and hence it would be a rangebound market. I see big sectoral divergence, and some sectors would do better. The broad market would largely remain there.

Q: Just looking at your portfolio, there is no presence in public sector banks at all, why have you weeded out those stocks, as a fund manager?

A: In the near term, with high inflation and high interest rates, the results of some of the public sector banks have seen a clear pressure on margins. That, coupled with the fears of NPAs would make PSU banks kind of subdued in the current environment. On the other hand Deutsche AMC believes that the private sector banks would do better and go faster in the coming quarters.  

Q: You are also underweight on IT as a space, any calls to change that in the past few weeks and months?

A:  Earlier we were largely absent from IT, which did help us in the last many quarters. Subsequent to the guidance of leading companies, coupled by the near term weakening of the rupee, the situation has improved. We would rather wait and watch for a few months before increasing our weight age on IT. The out look 3-4 months back on the concerns of rupee that the top line would be much lower than expected. When we cross this hump to where we get more color on whether the guidance is achievable, the sector will have more direction.

Q: You seem to be overweight on energy as well. Which specific legs of energy are you bullish on?

A: The bulk of weight age comes from oil and gas owners and we have some refinery stocks as well. Considering the high prices of crude oil, obviously companies owning such assets will tend to do very well in the environment.

Q: How big a concern for you is the political situation?

A: Announcement of the elections and so on can cause a near term kind of turbulence, but the fact is that we will be going to the polls anywhere within the next one year. As we pass through the months, this concern would diminish. Anyways we have to go through the polls every 5 years, so I don’t think elections will create more than minor reaction and spoil the leads to declines.