Manish Sonthalia also said that telco ARPUs could have bottomed out and a tariff hike is likely to be around the corner.
Benchmark indices clocked fresh record highs on Friday, but soon gave up its gain as the Street could be consolidating after the stellar rally in the past few sessions.
So, is there more steam left for the market? Will the ongoing earnings trends create a major impact?
Manish Sonthalia, Head Equities-PMS, Motilal Oswal AMC believes the valuations are rather full on the market. “Earnings are not as bad as they were expected prior to the start of the (results) season. GST-related sectors have performed fine. Overall, it is a mixed bag,” he told CNBC-TV18 in an interview.
Sonthalia expected pricing pressure on pharma companies easing in the next two quarters. This is getting built in 2019-2020 estimates. “It is a valuation play and the worst is probably priced in,” he told the channel, adding, companies with speciality or segment play are his preferences.
Among PSU banks, while the recap is a sentimental positive, issues on growth of the banks, among others, have to be addressed first.
He also believes telecom ARPUs (average revenue per user) could have bottomed and sees a tariff hike around the corner. “Things are incrementally positive here, but it is a tactical play,” he added.
Meanwhile, the market could be pricing in the huge shift seen from unbranded to branded segment post GST rollout in the consumer discretionary space.
In case of IT, he remains positively inclined towards the same and sees hardcore value in these stocks. US corporate spending will accelerate going forward and this is a tailwind for the sector, he added.Among the sectors to avoid are private banks and NBFCs, which have run up so fast. One could see a year of underperformance, he added.