Will pick pharma over IT as rupee play: Purushottam

In an interview to CNBC-TV18, Sangeeta Purushottam, professional investor says that among the export plays, pharma is better poised than IT in terms of growth outlook. Hence, it is a better bet in the face of falling rupee, she said.

The rupee was battered on Tuesday after it closed at a record low of 58.78 against the dollar and is likely to see more weakness on the back of Federal Reserve taking a decision on tapering its quantitative easing (QE). The rupee, however, managed to recover 15 paise against dollar in early trade today.

She is also betting on telecom sector saying the issues plaguing the sector have bottomed out now.

Below are the edited excerpts of Purushottam’s interview to CNBC-TV18. Q: What kind of downside risk would you say is present for the market because the first half of June was extremely bad and then the market saw some damage control?
A: Unless we have some very negative news, the range is likely at 5500 to 6000-6100. There is always a possibility that the market sees more downside than we are anticipating. Things do tend to shoot. So, if we have really disappointing news either coming on the economy or as we go further into the year we see a lot more political uncertainty coming in, then that range could be broken but that is a fair range. Q: How would you approach telecom? There has been some excitement in the last few days in that space?
A: The sector has actually bottomed out in terms of whatever could have gone wrong. From a long-term perspective, this sector offers interesting opportunities. Things will get sorted out over the next six to 12 months in terms of whatever remaining uncertainty is there, but whatever was there has been priced in. There are obviously company specific differences, but on the whole, the sector is looking interesting for long-term investors. Q: Would you still buy something from IT and where would you be more comfortable, some of the frontline names still or do you think there is value in the midcap stocks?

A: Given the kind of market that we are living through, it is still safer to be in the larger names. I would buy IT primarily as a hedge against the rupee. So, that is really is the key reason to buy it. Obviously, one has the safety that these companies are still generating cash but the demand environment remains overall still challenging. However, the rupee factor plays a role. Q: In which of the export sectors would you have the highest conviction right now if you want to play the rupee’s depreciation between IT, pharmaceutical and any of the other export related ones.
A: Pharmaceutical because in pharma, one is a little less concerned about growth as compared to IT. Ofcourse pharma is also a fairly company specific story given the complexities of addressing particularly the US market. But on the whole, the growth outlook in pharma is better than IT.