Start buying; don't panic or withdraw: Kotak Sec

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Kunj Bansal , Senior Vice President-Portfolio Managment Services, Kotak Securities , expects the markets to consolidate in the short-term.

 

According  to Bansal, these are times when investors should be looking to put in money and not be panicking or withdrawing. "But looking at the current variables in the market, in terms of macro economic factors and expected June quarter numbers, one could be better advised to just wait a little more before getting into the market in a very big way."

 

He is bullish on pharmaceuticals and FMCG as it continues to outperform the market and other sectors.

 

Excerpts from CNBC-TV18's exclusive interview with Kunj Bansal:

 

Q: How does it look from here? Are we going to go a bit lower before we can stabilize and consolidate around these levels?

 

A: It is always a difficult call. In terms of exact directions and short-term trends, probably technical analysis could help us. Nonetheless, we saw a sharp fall in the last one-week, except for yesterday. As a result, we might see consolidation in the short-term. Today's market direction will not be something which we can take a cue from, because it's expiry day. But we should see some consolidation at current levels.

 

Q: Would you watch out for RBI action, inflation numbers, or second quarter earnings to take a call on where this market is headed in the next 12-months?

 

A: All these three are already factored in by the market. The market is always very efficient. If tomorrow's inflation number comes as another surprise, like the last Friday's number, then that would again be a decider for the market.

 

There is so much noise on inflation, oil prices, international markets, and market fall etc, that attention on the June quarter number has been less. That is something we need to keenly watch out for. If those numbers come relatively on the positive side and better than expectation, then that's one immediate support that we could see for the market.

 

Q: How are you approaching all these macro economic changes - inflation and interest rates? Are you tweaking any of the EPS growth forecasts that you have of companies either this year or next? What would be your stock selection looking like?

 

A: All research team are working on that. We have already seen a lot of changes in recommendations on various sectors and companies from various research analysts. In terms of the PMS, or Portfolio Management Services, we certainly have been changing the portfolio compositions for our investors over the last few months. The various sectors, which were darling of the stock markets last year or the year before, have moved into defensives.

 

Q: What would be the selection for the next 12-months? Do you think this would be a good time to put in some money or do you think you are fairly sure that you would get them at more levels?

 

A: It is again a difficult call. But looking at the current variables in the market, in terms of macro economic factors and expected June quarter numbers, one could be better advised to just wait a little more before getting into the market in a very big way.

 

In terms of composition going forward, we look for sectors like pharmaceuticals and FMCG that continue to be outperformers over the market and other sectors to in sectors. We have been holding this view for quite sometime. We continue to hold that view. It is very difficult to take a call on the so-called high beta or last year's favoured sectors like realty, banking, and finance. One will have to wait and watch out for the performance of those sectors.

 

Q: As part of your PMS product portfolio, you deal with a lot of HNI clients. What's their mental makeup at this juncture? Are you seeing them redeeming part of their commitments?

 

A: At Kotak, we run close-ended schemes. As a result, we are able to advise or hold on to investors, who are not panicking in these bad times. These are times when investors should be looking to put in money and not be panicking or withdrawing. We are almost, in Sensex and Nifty terms, down about 30-35% from the peak. So, there is always a question whether one should be looking to get in, out, or even look to hold on. So, because of the close-ended nature of our schemes, we are not seeing that kind of panic.

 

Investors are jittery, not because the market has fallen. But every time investors get into the market, it is towards the peak or the highs of the market. If we look at the profile of the investors in general anywhere, whether it is in PMS, mutual funds, or direct equities, a large part of investors have come towards the highs of the market.