Jul 13, 2017 02:31 PM IST | Source: CNBC-TV18

Market to be rangebound for 6-12 months; stay away from telecom: DSP BlackRock

The fund house believes that a big upside in indices from this point is difficult, but does not expect any major correction due to good macros

Even as the market soars to a new high everyday, there are experts who see the momentum slowing down.

DSP BlackRock Investment Managers, for instance, believes that the market will now remain rangebound in the next 6-12 months. “In terms of valuations, we are at the upper level of it. Making a case now for a big upside from this point is difficult,” Atul Bhole, VP & Fund Manager, DSP BlackRock Invst Managers told CNBC-TV18.

Having said that, Bhole does not expect a big correction in the market as macros have started to fall in place and interest rates have come down. So, how does one play this market? Bhole believes there is a lot of scope for stock-specific action. “If the stock selection is right in the large-cap space, there is good money to be made in 2-3 years,” he told the channel.

Speaking of the sectoral action, he said, while he is overweight on the oil and gas sector, cement and construction companies too look good in the backdrop of the economic scenario.

Among midcaps, from a long term investment horizon, it is best to be in the consumer-centric companies. One could look at FMCG and durables space, Bhole said.

He highlighted that although the growth profile of IT companies has reduced to 6-10 percent, their valuations in terms of PEG (price/earnings to growth) are still higher. He expects the sector to consolidate in 6 months to 1-year's time frame.

Meanwhile, he prefers staying away from the telecom space on the back of challenges that the sector is facing. Every firm is implementing its own strategy and companies are taking a longer time, compared to what investors seek, he added.

Simultaneously, on PSU banks, the fund house is very comfortable as slippages are trending down and 90 percent stressed assets are recognised. In this context, valuations are attractive, he added. The new issue, however, is the merger and acquisition buzz in the space.
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