SENSEX NIFTY
Mar 04, 2013, 09.37 PM IST | Source: CNBC-TV18

IT, pharma may do well; see bargains in midcaps: Dimensions

Ajay Srivastava, CEO, Dimensions Consulting is doubtful of India being able to achieve the projected 6.1 percent GDP growth in 2013-14. “Post Budget we need to factor in 4.5 percent at the tops for the GDP growth rate in the current year,” he said in an interview to CNBC-TV18.

Ajay Srivastava, CEO, Dimensions Consulting is doubtful of India being able to achieve the projected 6.1 percent GDP growth in 2013-14. "Post Budget we need to factor in 4.5 percent at the tops for the GDP growth rate in the current year," he said in an interview to CNBC-TV18.

Expectations were high going into the Budget, but post Budget given that the mainline stocks are under pressure it would be very difficult for the Nifty to breach 6100 in the short-term. 

Also Read: Optimistic India Budget jars with revenue reality

However, Srivastava sees trading opportunities in the midcap space. "Pricing is looking good for some stocks in the midcap space. We are reaching a zone of more comfort to buying," he added.

Sectorally, IT and pharma are likely to outperform other sectors in a weak market.

Below is the verbatim transcript of Ajay Srivastava's interview on CNBC-TV18

Q: Budget has come and gone, but the market has not gone up at all. It remains in a fairly weakfish trend. Do you expect to see more damage here?

A: Yes, the reason being that the Budget compounded the theory that there will be a big transfer of resources taking place from the private sector into the government sector which will use the money inefficiently. If you see the expenditure increase, the government has pegged it down but nothing tells us that reversal is happening. Then you saw the petrol price increase taking place just after the Budget. So everything tells us that this year there will be a big transfer of resources again taking place on the private sector. As it demand is weak and we saw the gross domestic product (GDP) numbers.

You saw the February series numbers of autos and many other industries are going to be much lower than what people thought. While we are having a demand which is going down in the system, the government is transferring more resources which will ultimately end up in the lower GDP, lower demand for products and therefore inventory rundowns for companies. So, it is not a happy scenario till you see government curbing the expenditure. It is not about subsidies. It is about the expenditure as well. Subsidies are like a fiscal support to the system. Government expenditure is like money out.

Q: Are you beginning to fret about growth? In the last few weeks, a lot of people have started questioning whether the earnings and growth recovery is on track after seeing last quarter earnings, seeing the macro GDP numbers. Do you think we should work with lower growth for FY13, something that needs to get factored into valuations?

A: 6.1 percent looks very unlikely. Internally, we need to factor in 4.5 percent at the tops for the GDP growth rate in the current year.

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READ MORE ON  Dimensions, GDP, Budget 2013, Nifty, IT, pharma, FII
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