In an interview with CNBC-TV18, Sudip Bandyopadhyay of Destimoney Securities said, risk on trade in the near future seems quite unlikely in the absence of great global news flow and domestic events. Although, events post the presidential election in India is going to impact stocks, it is not really going to change the nature of the market, at least any significant long term impact on Indian equities is ruled out, said Bandyopadhyay.
Destimoney Securities continues to be bullish on the pharma and FMCG sector, informed Bandyopadhyay. Despite the poor performance of Infosys and the concerns in the IT sector, he feels the consistent performance of TCS is likely to take the company to greater heights in the near future. Along with this, he remains bullish on TCS.
Below is the edited transcript of the interview on CNBC-TV18.
Q: What do you think the markets will do here on? Will it be contingent on getting something positive after the presidential election? Do you think we could see major losses if nothing comes after the July 19?
A: Not really. I think the global event flow is not at all conducive. Apart from Europe and concerns on US, there are significant concerns developing on the China growth story. As we know, a whole lot of economic activities do depend globally on China and China's progress.
The global news flow is going to be subdued and I don't think we will get into a mode of risk on trade in a big way in the near future. Yes domestic events will have impact on stock specific matters. But, domestic news flow post presidential election is not likely to be such that it will be in a position to change the nature of this market.
Yes there may be temporary upsides and temporary movements in the positive direction but I don't think it will have a significant long term impact on Indian equities.
Q: Just started the earning season, still lot more to go. Ahead of that, would you have any pre-results buy or sell on individual stocks?
A: We are very cautious on metals as a sector. We are generally avoiding real estate for sometime. We continue to remain bullish on pharma as an industry, as a sector and we are selectively bullish on FMCG.
What has been bothering us in the recent past is the progress of monsoon. A lot of companies on which we were reasonably bullish are also being watched very carefully due to this monsoon situation.
Q: How do you play the markets now? Let's first come to the IT space. How are you approaching the space after you heard from TCS and Infosys? Do you think we are sitting on the cusp for a possible price war and is the sector itself going to be hurt?
A: Not really. In fact, this trend as far as Infosys is concerned, was visible for quite sometime. I think the company did loose momentum about 12-18 months back. That's getting demonstrated on quarter on quarter performance.
Something drastic needs to happen at Infosys for them to gain back momentum and try for the leader's position once again. But that spark is definitely missing, whereas TCS consistently have been performing well. It’s not that this quarter they have surprised the market on the positive. Consistently they have been doing well and we believe that fundamentally TCS is poised to take even a bigger lead on Infosys in the near future.
As far as the other IT companies are concerned, we continue to remain bullish on HCL But, we are not too bullish on Wipro at this stage. We are also not too bullish on the tier II IT companies, considering the global environment and the challenges which these companies are facing.
Q: Any thoughts on SKS Micro Finance? That’s had a big run but, today it has fallen about 5% and lots of news about loss in Q1, there is QIP going on as well?
A: Well we have been little cautious in the microfinance sector. There have been some positive announcements in the recent past from SKS but, we maintain our cautious view as far as SKS is concerned.
Microfinance business has changed its nature completely and most of these companies are talking about generating revenues from other services which is a space where there is enough and more competition already. We have to see which of these companies have the strength and competence to excel in those fields. It is a very fluid situation as far as microfinance sector is concerned and SKS in particular.
Q: Given this view, would you advise investors to perhaps stay with cash or with fixed income for the moment? If it has to be equities what areas should it be?
A: To a certain extent, we have been maintaining the view that roughly around 50% can be in non-equity instruments. As far as equity is concerned, consistently our view has been that you need to be stock specific and sector specific.
It is not that the index will do anything great. There are still significant opportunities in sectors like pharma, FMCG and select companies which are in the right niche at the right valuation. It is a question of bottom up stock picking at this stage.