Bet on PSU banks, auto; gung-ho on 2013: Karvy

Varun Goel of Karvy Private Wealth explains, in an estimate of the market for 2013, explains that he expects the market to perform better in the New Year than 2012. Goel picks PSU banks and the auto sector as the top outperformers for 2013.

Also Read: Budget 2013: Refrain from timing mkt; cherry-pick sensibly: Purushottam

Below is an edited transcript of Goel's estimate on CNBC-TV18

Q: How are you approaching this current impasse in the market? Do you expect the market to break upward once there is some kind of a resolution on the fiscal cliff?

A: Definitely. I think the year 2012 has been very good for the market and we are even more positive on 2013. We expect an upside of 30 percent in the Indian equity market in the calendar year and that will be backed by sharp interest rate cuts, fiscal consolidation and a revival in GDP growth. As far as the US fiscal cliff issue is concerned, I think it will cause some short-term fluctuations but the market will tend to move beyond that by the end of January 2013. So the scenario looks extremely supportive for Indian equities this year.

Q: What are your picks for 2013? Are there any stocks that could outperform the markets or give good returns from current levels?

A: One sector that is likely to outperform significantly is the public-sector-bank segment. I think that sector has underperformed for a long time and with little expectation of cuts in interest rates, the sector is going to bounce back strongly. We also expect automobile sales to considerably revive this year.

Q: What is your opinion on NBFC stocks which are being seen as potential candidates for banking licences? 

A: I think there are a lot of NBFCs that are potential candidates for licences to conduct banking. However, it is difficult to pinpoint which NBFC would receive a licence. In my opinion, old private sector banks are strong candidates to undergo consolidation in the banking sector. Housing finance companies also look very attractive and once interest rates come down, there will be a sharp run-up in these stocks.