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IT may offer some tactical trading opportunities, stay away from pharma: BNP Paribas

According to Manishi Raychaudhuri of BNP Paribas Securities, IT may offer some tactical trading opportunities while one can stay away from pharma space.

September 02, 2017 / 08:19 AM IST

Manishi Raychaudhuri of BNP Paribas Securities told CNBC-TV18, "IT sector may offer some tactical trading opportunities even though over the long term the IT sector still faces significant fundamental headwinds. The companies will have to reinvent themselves significantly if they are to weather the storm which is likely to arise as a consequence of artificial intelligence and several other factors which could disrupt the old business model of manpower cost arbitrage. As a consequence of a very sharp underperformance, I think IT might offer some tactical trading opportunities."

"Pharmaceuticals is slightly different, here apart from the problems that the Indian companies are facing as a consequence of increased vigilance from the US FDA, there is also a significant degree of competition that has built-up from the smaller companies. As a consequence the margins of that same old generic drugs are being driven down almost every day. I think that downward spiral in margins could actually last for some time linger," he said.

"So, in a nutshell we do have some small presence of Indian IT in our model portfolio. However we do not have any of the Indian pharmaceutical stocks and we are unwilling to step in into that sector at the present point in time," he added.
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