Banks could still gain market share as a significant amount of space vacated by NBFCs which are suffering from liquidity challenges. Hence, we continue to prefer the banks.
We prefer sectors with high earnings growth visibility. These include Private banks, IT, Cement and Consumer staples, Naveen Kulkarni, Head of Research, Reliance Securities, said in an interview with Moneycontrol’s Sunil Matkar.
Q. Do you think government selling BPCL is the right strategy and is it time to support fiscal deficit?
A. Yes, selling BPCL is the right strategy as it will not just support fiscal deficit but pave the way for growth in the oil and gas sector. There could be further reforms in the sector and it is a very important indicator of the government’s policymaking.
Q. Despite corporate tax rate cut, do you expect more downgrades after September quarter earnings?
A. In the near term, the impact of corporate rate cut is likely to be overstated. Meanwhile, in the long term it will be understated. Hence, in the near term, there could be earnings downgrades as the chances of a weaker quarter continues to remain high.
Q. Have you changed your Nifty or Sensex target especially after current market weakness, following corporate tax rate cut?
A. We are maintaining our Nifty target of 12,800 for April 2020 following the corporate tax rate cut as we are likely to see sequential improvement in growth in the forthcoming quarters.
Q. Some analysts say credit growth will pick up only in fourth quarter of FY20. What are your thoughts and are you still a buyer in banks?
A. Banks could still gain market share as a significant amount of space was vacated by NBFCs which are suffering from liquidity challenges. Hence, we continue to prefer the banks.
Q. Do you feel the downside for the market is capped after government measures and what more do you expect from government/RBI to revive the economy?
A. Yes, we believe there is strong support of earnings and interest rates which helps in arresting the downside.
Q. Where (on sectors front) do you like to put your money now and why? What is your pecking order?
A. We continue to prefer sectors with high earnings growth visibility. These include Private banks, IT, Cement and Consumer staples.
Q. Do you expect this festive season to be good for autos and consumer companies?
A. It is difficult to gauge but the festive season should arrest the downward spiral that the auto sector was getting into.Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are his own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.Get access to India's fastest growing financial subscriptions service Moneycontrol Pro for as little as Rs 599 for first year. Use the code "GETPRO". Moneycontrol Pro offers you all the information you need for wealth creation including actionable investment ideas, independent research and insights & analysis For more information, check out the Moneycontrol website or mobile app.