Moneycontrol
Mar 12, 2015 05:43 PM IST | Source: CNBC-TV18

Market consolidation not yet over; pharma good bet: Pros

Prakash Diwan of Altamount Capital Management is of the view that the market hasn't gone through the complete phase of consolidation yet and even though the market witnessed a bounce back today, it is unlikely to last for long.

The bounce back seen in the Indian equity market today could be technical since the market had given up its gains in the last few sessions and it is likely to see further correction but may not be a deep one says, Dipan Mehta Member BSE & NSE.

His overall view on the market still remains negative and expects it to remain sideways for three months or so.

Prakash Diwan of Altamount Capital Management also concurs with Mehta's view and thinks that the market hasn't gone through the complete phase of consolidation yet and even though the market witnessed a bounce back today, it is unlikely to last for long.  

The market will remain range bound and so he advises selling on rallies. He is also skeptical of the upcoming earnings season, which is likely to be subdued.

Sudarshan Sukhani of s2analytics.com says there is no fresh trade as of now since the market is choppy and in a narrow trade.

Speaking about their stocks and sector specific ideas, Mehta says he is generally positive on pharma but because since he is negative on market, pharma stocks may also see some correction.

According to him Indian pharma companies are cashing in on opportunities in developed markets but the earnings of these companies need to support them. He is a bit doubtful of midcap pharmas because of high degree of volatility seen in them and so prefers largecap pharma companies than midcap ones.

Mehta's outlook on telecom is negative especially with the entry of Reliance Jio and its impact on competition. He says, although the telecom spectrum auction must have been a bonanza for the government it would definitely put pressure on balance sheets of the companies and they may not see a linear growth. So, he  has wait and watch on the sector and would look at it after six to twelve months once there is more clarity on what the exact competitive position in the industry is post entry of Reliance Jio.

Diwan is upbeat on pharma companies like Suven Life SciencesNectar Lifesciences on back of shift in their business models. From the telecom space he likes Idea, which has been a decent performer. For Idea, he says the pricing power seem to be coming back and particularly with the product mix the ARPU’s for the company too have started turning healthy.

However, Bharti Airtel has headwinds in terms of its high debt and also carry some baggage on their African business which Idea doesn’t have, says Diwan.

Sukhani says Cairn India is showing signs of sellers getting exhausted and recommends getting out of short positions but says it is too early to suggest a buy.


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