Invest in media, logistics: Prime Sec

Sonam Udasi, Head of Research at Prime Securities sees markets worsening for the short term. He feels that the market doesn’t like the uncertainties like interest rate hikes, rupee and inflation numbers.

He recommends investing in media and logistics and specifically where visibility is great. His advice is that if one does not have at least a year’s horizon, one should stay away.

Excerpts from CNBC-TV18’s exclusive interview with Sonam Udasi:

Q: How bleak does it look, this second continued round of inflation and interest rate hikes?

A: It could be actually worsening for the short term. The market doesn’t like these uncertainties and the way the rupee is reacting, inflation numbers are coming up. Though, the next six months may not be so bad for India Inc., the markets tend to look beyond that and as far as they are not convinced that those will get better, there will be some concerns.

Q: There is also the political uncertainty, how bad can it get and at prime what are the levels you are looking at? Do you see it going all the way to 13,000 and are there any levels in your mind?

A: There are no limits as to when volatility will come in. Whether 13,000 or 12,500, the question is not where it goes, but where it bounces back, because there are aggravations in a particular day. There are concerns, and our advice is that if you do not have at least a year’s horizon, you should stay away. But, there are specific counters that you would like to take positions on where you wanted to build a long position.

Q: Looking at the advance tax payments this quarter, they have come in 25% higher. You have been talking to a lot of corporates, is there a sense you get that Q4 onwards there would be a slowdown in earnings and you would have to revise your EPS estimates on most sectors across?

A: EPS revisions have started happening across the board, and already people are downgrading numbers. I must also add that because you don’t have visibility, either you may be very conservative or downgraded very aggressively. So, there is not much sense on how it is going to pan out, but on specific sectors, if we like something then we recommend to clients.

Q: What is it?

A: We like media and logistics, specifically where visibility is great.

Q: What’s a sell?

A: We are not very bullish on the auto sector and some of the banking counters. For real estate there will be a overhang, but there are certain large caps you could look at. Even in banking, there are certain counters like the ICICI, which we continue to be bullish on.