In an interview to CNBC-TV18, David Pezarkar, head - Equity, Daiwa Mutual Fund says that the global markets are some sort of consolidating now.
In an interview to CNBC-TV18, David Pezarkar, Head - Equity, Daiwa Mutual Fund says that the global markets are consolidating now. He stressed that there is no reason to be ultra-bullish on Indian markets. He feels that capital goods might not outperform because of many uncertainties in the sector, but there could be individual standouts that need to be looked at.
Below is the edited version of the transcript. Also watch the accompanying video.
Q: Liquidity and global market support has been working in our favour. Do you see that peter off in next couple of months?
A: Global markets are some sort of consolidating now. As of now, there is no reason to be ultra bullish on our markets. Most of the optimism has faded away. The markets will stay in a sort of range.
Investors would be advised to try and look at panic kind of reactions to add on to their equity positions in large cap, well managed companies with strong balance sheets. I think that will again be the focus after the January and February rally of high beta stocks.
Q: How would you approach capital goods now?
A: Performance of all the sectors in March has been a complete reversal when compared to their outperform show in January and February. There has been a move towards risk aversion.
Sectors such as FMCG and pharma which were outperformers in 2010-2011 have again started outperforming. Capital goods might not outperform. We would have to look at individual stock ideas. The unbridled optimism which was created in earlier months might not sustain. There are too many uncertainties for the sector as a whole, but there could be individual standouts and those will have to be looked at.
Q: We have reached the lower end of the trading range. Do you think the risk reward is in favour of investments?
A: The risk reward is sort of balanced as of now. There is some amount of nervousness around but we are not seeing the kind of pessimism that we saw in November-December last year.
If we see that kind of pessimism or we see similar kind of selloff, then it will give a extremely good investment opportunity. At this point it is better to look at the large well managed companies and trade in a range of 7-10%.
Whenever a stock is down around 5-6% from its high, one can look at it. Unfortunately that’s how the markets will behave for next two or three months or unless we see strong policy action or oil cooling off substantially.
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