Nifty to hover in 5600-6100; bet on IT, pharma: Amisha Vora

Amisha Vora of Prabhudas Lilladher expects the market to continue to trade in a broad range of 5,600-6,100 because it is still grappling with fundamental issues like inflation and slowdown in some sectors.

IT and pharma stocks will continue to be in favour given the risk of rupee depreciation, Vora said in an interview to CNBC-TV18. From the pharma pack, she is positive on Sun Pharma, Ranbaxy Laboratories, Dr Reddy’s and Ipca Laboratories. Also read: Brace for Sensex EPS downgrade this year according to Merrill Lynch Below is the verbatim transcript of her interview on CNBC-TV18 Q: What have you made of some of these pharmaceutical names at 52-week highs? Within that pack which is your top buy? A: The way the overall economy and market is placed, it so appears that one by one a lot of sectors are in some or other trouble. Also in terms of rupee there remains a risk of little depreciation. So, pharma and IT will continue to be in favour and more so pharma, because maybe in the next couple of years, at least in terms of exports both to US, as well as emerging countries the growth will be very good. In terms of the new pharma policy, domestically they could have some margin pressure, but overall as a sector 15 to 18-20 percent kind of a growth is a possible. Comparing it to the current scene that growth looks very good especially since even domestic consumption has started taking a bit of knock. In terms of our favourites is Sun Pharma. It is an all-weather friend and it continues to perform consistently. Beyond that we continue to like Ranbaxy Laboratories and we have been recommending it for a while. We think over two to two and a half year horizon, it can have a complete turnaround both in terms of EBITDA margin, as well as turnover composition. The other consistent player in large cap is Dr Reddys Laboratories and in small cap something is Ipca Laboratories. We like these both as well. Q: What about the markets are you as bullish on the Nifty especially going into April considering that it will be earnings season and the Budget session will reconvene as well? A: Last month we continued to believe that maybe 5,600- 6,100 could be a broad range that the market may move. At one point of time in the last month, we probably thought that 5,600 level looked very tricky and did not know whether the level would hold. However, we think that this is the broad range in which market will move.  There are fundamental issues which we all know, then there are different sectors facing pressure of slow down and inaction, and against that we are having a scene where inflation probably in manufacturing is coming under huge control and in April the government spending will restart. Overall as well the global liquidity outlook continues to remain good. So, although the overall improvement is limited but it is there, and there are problems as well. So the market could continue to remain pretty range bound in this scenario. Q: How would you approach Bajaj Auto now? When we spoke with the management they indicated that times are tough, but they expect to see some revival in FY14. Would you buy any of those stocks? A: Looking at the sector one can see there are some issues terms of the consumption demand in India faced by both durables and non-durables in last one-two quarters. The competitive intensity within this sector is increasing but if one looks at Bajaj Auto, they have a reasonably large portfolio of exports which could be a saviour for them compared to their closest Indian competition where players are still largely dependent on Indian market and where the Multinational Corporations (MNC) are taking away market share from both of these people. Bajaj Auto to that extent is placed better. Exports as well as rupee depreciation both should come handy to them in terms of maintaining their margins. We as a house do not have a buy or accumulate at the moment, but I think the risk return would be neutral at the moment for the stock.