Bullish on select tech, pharma, banking stocks: Quantum AMC

IV Subramanium, Director, Quantum AMC said looking at the overall Sensex, the energy sector as well as banking stocks look attractive. He told CNBC-TV18 that pharmaceutical stocks and technology stocks, particularly the larger companies, look attractive.

“I would be looking at many banks, which look attractive with a slightly longer-term horizon. Even if I take into account near-term margin pressures and cost pressures, on the longer-term basis, some of these banks offer great opportunity to invest,” he stated.

Excerpts from CNBC-TV18’s exclusive interview with IV Subramanium:

Q: What is your sense on banking stocks? In today’s trading session, a lot of these PSU banks have seen a smart rally. Is this more value buying and cherry picking or is this some material event that has kept these stocks excited today?

A: I do not see any material event at least in the immediate horizon. In general, there is a decline in the stock prices in the last few months in the banking space. It does appear that there is a lot of value buying emerging. I would be looking at many banks, which look very attractive, if I have a slightly longer-term horizon.

Even if I take into account near-term margin pressures and cost pressures, on the longer-term basis, some of these banks offer great opportunity to invest.

Q: How does a slightly longer-term investor approach this market at all? Are current levels good enough for one to do any cherry picking at all? Are you sure that looking at the way crude and other macros within the country are shaping up, you are definitely going to get your choice stocks 10-15% lower?

A: I would personally look at buying at current levels many of the companies, which look fairly attractive as long as one is comfortable with the long-term revenue growth or long-term margin assumptions of these companies.

Most of the companies we have seen had a cyclical peak over the last 3-5 years. That sort of profit growth will not come in over the next couple of years. As long as one has priced that in and is comfortable with the valuations, some of them look very attractive and therefore one should go ahead and invest.

If it declines further, one can always rejuggle one’s portfolio. If one has the additional cash, one can redeploy. But I would not want to wait for the perfect timing or bottom to invest. They are attractive even at these levels and one should go ahead and invest in them.

Q: Is there anything from the midcap space that appeals you at this stage, considering they have sold off between 50-70%?

A: I am actually neutral to the size, in terms of whether it is largecap or midsize. The menu has now become larger, like you were finding value across segments, marketcaps or across companies with different kinds of turnover.

The investor has to obviously recognize that the midsize companies will have higher risks in terms of high interest cost and a slowdown will impact them. I am agnostic to whether it is a largecap or midsized one.

Q: You won’t be agnostic to sectors. What would be the sectors and stocks of your choice?

A: I would not want to comment on stocks. But if I look at the overall Sensex and the indicators or different sectors, energy still looks attractive and some of the banking stocks look attractive.

Cyclicals look attractive but there is always a risk of the earnings being far lower than anticipated. Pharmaceutical stocks and technology stocks, particularly the larger companies, look attractive. So, I would look at these kinds of stocks.

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