Check out: Quantum AMC's top sector bets

184138 Investors following Reliance. Share this News with them.

0

Like this story, share it with millions of investors on M3

Check out: Quantum AMC's top sector bets

In an interview to CNBC-TV18, IV Subramaniam, Director, Quantum Asset Management said that he is comfortable with the fundamentals in the auto space especially in the two wheeler sector. While certain segments like engineering look expensive, he said he is comfortable with sectors like banking, pharma and cement.

Post your opinion here

 

0

Tweet

Share on Tumblr

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » RELATED NEWS Nifty closes above 5500 after 31 months; ICICI Bk lead Baer Capital sees Sensex rising to 21000 by year-end Nifty hits 5500 for 1st time since Feb 5, 2008 Flat global cues may not deter mkts' optimism

In an interview to CNBC-TV18, IV Subramaniam, Director, Quantum Asset Management said that he is comfortable with the fundamentals in the auto space especially in the two wheeler sector. While certain segments like engineering look expensive, he said he is comfortable with sectors like banking, pharma and cement.

He however cautioned that global concerns could make Indian markets volatile and cautioned investors who depended on liquidity in the system to be prudent with their investments.

Here is a verbatim transcript of the exclusive interview with IV Subramanium. Also watch the accompanying video.

Q: What do you make of this 5,530? Do you think this time around it looks like a sustainable peak and that the markets are still showing a lot of headroom?

A: The markets definitely show a lot of headroom and that is largely due to corporate earnings still looking pretty good over the next couple of years. I would still want to recognize the fact that there could still be global risks which can spook off some of the near term investors, particularly people who are depended on large liquidity in the system, to remain invested.

That could affect India or make it a bit more volatile. But in terms of new picks, I definitely think we would also surpass the earlier peaks in January 2008 and I do not see any risk to that. But in the interim period there could still be a lot of volatility.

Q: There are some who believe that the earnings and the earnings growth are pretty richly valued by the markets at current levels. You cannot argue with liquidity when it is coming. Would you say we are in some kind of a heady terrain at this point in time or do you still support this with fundamentals?

A: I would still support it with fundamentals. Just to look at the Index and then say that the valuations look rich may not be the correct way to do. There are still a lot of individual stocks which look very decently priced. I would not say they are very cheap but at the same time they are definitely not in the expensive zone.

There are certain segments which look expensive to us like the engineering assets space. We feel it has become expensive, but we are very comfortable with the consumer discretionary. We are beginning to get comfortable with the cement companies in India. There are enough opportunities in banking, pharmaceuticals and other areas where the valuations are not as rich as one would think it is by just looking at the Index.

Q: In this rally in part first we saw the autos performing, there was pharmaceuticals and now banks which are leading the charge. Would you be worried that the two big stocks Reliance and ONGC have not participated in this rally and do you see them participating going forward?

A: I do not want to comment specifically on the names which you mentioned, ONGC and Reliance. As long as there is value, these stocks would perform. There would be near tem uncertainties which may keep it subdued for sometime. But from pure valuations in ONGC and in terms of refineries, we still feel that there is still upside left in these companies.

Q: You said consumer discretionary. Which space exactly? Would you still go even with the autos? We understand that most of them are still with the three week to three month booking period unable to deliver, such is the kind of demand pressure. Which space in the entire consumer discretionary?

A: I have been meeting many of the automobile companies in the recent past. While the comfort with two wheelers is already there, we like both in terms of valuation and growth profile we like the two wheeler space.

The commercial vehicle is where we still do not have exposure and we may be revaluating it after our recent visits in that space. In terms of the four wheeler car space, the fundamentals are still very good over there and the valuations aren't very rich. But at this point in time we do not own any stocks in that space. Our investment is largely in the two wheeler space.

Q: Banking has already run up a lot. Would you want to give us a more fine distinction as to which space you will be in? We saw a lot of public sector undertaking (PSU) banks scaling new 52 week peaks in the past few days including Bank of Baroda. Which space in this private, public, old private sector?

A: I will not dissect the sector in terms of public sector and public sector. At the end of the day, it is what price you pay for these banks. There could be certain risk in PSU banks and they need to be priced differently or valued differently. As long as you price the risk in these sectors and you look at the valuations and you are comfortable, then I have no problem investing in whether it is a public sector bank or a private sector bank.

But our preference would generally be stocks which are liquid. The larger PSU banks will fit that bill and even on the private sector banks, I need to see a lot of liquidity in the stock markets before we could do further studies on that. In terms of valuations, as long there is value, we are agnostic to whether it is a PSU bank or a private sector bank.