Ratnesh Kumar of BOBCAPS believes in staying away from pharma space, while real estate could take some time to recover.
PSU banks on Monday continued its strong run from the previous week as investors continued to bet on the government’s bank recap programme of Rs 2.11 lakh crore. The Nifty PSU bank index was up over 2 percent in the first half hour of trade. As a result of this rally, frontline indices also rose to fresh highs.
Hailing the move, Ratnesh Kumar, MD and CEO of BOBCAPS told CNBC-TV18, “It positions the sector to move forward and trigger the next round of investment growth and credit growth.” While he also observed that the move could benefit weaker banks, over a 6-month period whether the recap leads to greater resolutions for large NPAs remains to be seen. The move will also lead to a competition for credit among companies, he added.
So, the right way to approach the market could be to focus on companies with potential for further growth. He named sectors such as autos, gas utilities and EPC (engineering, procurement, construction) as the ones to watch out for.
Speaking on sector-based moves, Kumar believes in playing through consumer discretionary space through sectors such as autos. “If we are going to start another cycle of credit growth, economy, cyclicals and domestic are to be kept in mind as well. So, instead of staples, one could play through segments such as autos,” he told the channel.
On the real estate space, he observed that volumes were at all-time lows and other aspects such as RERA are playing out. The sector could take some time to recover as it is still adjusting to the regulatory regime.
Among the underdogs space, Kumar sees good activity and big projects for EPC space. With the government in its second half of the term, infrastructure activities could pick up and hence EPC could be one sector. He chooses to stay away from pharmaceutical space.
For entire interview, watch accompanying video.