Gautam Sinha Roy of Motilal Oswal Securities, talking to CNBC TV18, opines that given the volatility in the markets as we approach the Budget, even if there is a pick up in certain stocks, it is safe to bet only on high quality defensive ones.
He advises against taking a long bias on infrastructure and defense stocks, as many construction companies get a substantial part of their orders from government. So, with fiscal deficit high on the government's agenda, he expects spends on stocks in these sectors would take a hit, one example being Bharat Electronics.
Here is the edited transcript of his interview with CNBC TV18
Q: In the current volatility and pick up in certain stocks in the run up to the Budget, are there any recommendations you would like to mke now, or it is better to wait and watch?
A: Given the current market volatility, in both Indian and global markets across asset classes, it is best to stick to high quality defensive names.
Speaking about the Budget, we should get some positive cues from the power sector. If one can has to take a long call, we have couple of good quality names like NTPC and Power Grid which we are positive on.
Q: Are there any stocks or sectors that could be adversely impacted in this Budget? Are there any you would stay away from?
A: Given that fiscal deficit is running high and fiscal consolidation
is definitely on the government’s agenda, then public sector spend on infrastructure as well as defense will definitely be impacted. So, you should not take a long bias on those stocks.
One example of that would be Bharat Electronics, which is a defense play. You would have many construction companies which get a substantial part of their order book from government spend on infrastructure. So, from a Budget perspective, maybe these names might not look attractive.
Q: If you had to give us a couple of buy ideas or an investment call,
either in the front liners or the midcaps for the next week, what stocks would they be?
A: I think NTPC and Power Grid are stocks that could be benefit from the Budget.