BNP Paribas positive on aviation, telecom, media

Apurva Shah, head investment research, BNP Paribas Asset Management, says that he is positive on the aviation sector because the comparative intensity in the market is going down and there is significant improvement in the pricing. He is also positive on telecom and media but underweight IT.

Also read: Non-implementation of reforms weakening Re: Religare Cap Below is the edited transcript of his interview to CNBC-TV18. Q: Jet Airways and SpiceJet were big starts yesterday. What is your view on aviation space and are you buying into that strength? A:  We have a positive view on the aviation sector for some time because the comparative intensity in the market is going down and there is significant improvement in the pricing. The fact that FDI will attract investments into these companies is giving further boost to the stocks. But overall, we have been positive on this segment as a turnaround play. Q: How do you expect the markets to perform in the month of December? Is this range bound trade expected to continue? A: I think the markets have been remarkably flat for the last month and a half. Even now, the flows picture is not looking that great, it has relatively weak for the last several weeks now. I think that picture will continue for some more time. Given that the rupee has also depreciated so much, I do think that you should see some flows improving towards middle of December or early January. But till then, I believe we are going to remain in this range although I do think that we should start seeing some uptick as we come to the end of the year. Q: You track IT, up until now the year and the month has been a washout for that space but yesterday there was the first sign of bit of buying there. Would you go in constructive on IT for next year or is that still a sector to avoid? A: We have been underweight on IT. Clearly, the rupee is helping to some extent. But on the whole, we are not excited about this sector given the growth that is expected in the next few quarters and the margins. So, overall we remain underweight. We will wait for some improvement in the growth prospects, especially volume growth over the next couple of quarters before we think of turning constructive on this sector. Q: This series has seen two sectors move that you track, media and telecom. Have you guys turned positive on either? A: We have been positive on telecom for a while. Even when it was going down, with all sorts of regulatory issues, we kept the faith. We have been positive on telecom and that continues even now. We think that again the play over here is essentially a reduction in the comparative intensity. We have seen early signs of some improvement in pricing power and the regularity uncertainty going down. On the whole, the telecom sector is looking good from here on. Media is a small sector and one has to be stock specific. The prospects for individual stocks vary widely; the print media has its own dynamics, electronic media has its own. So there is no one view that I can give on media sector. We have been constructive on this sector selectively for a while now.