India growth story still on: Motilal Oswal

Raamdeo Agrawal, director & company founder, Motilal Oswal Financial Services says that the market is steady and holding out well at 17,000-17,500 level. Automotive and FMCG stocks are faring well. Agrawal says if rupee touches 55, diesel deregulation will happen much faster. 

He further says, flows indicate that people are still not giving up on India. In global comparison, India is still standing out as very compulsive investments. We are not seeing any major selloff. Below is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying video. Q: With Moody’s reaffiring their view on India and S&P lowering India outlook, how should the markets read this movement?
A: There is a sense of pessimism at higher level. The market is steady and holding out well at 17,000-17,500 level. Consumer-oriented stocks are doing well. Automotive and FMCG stocks are faring well. There is a virtual boom in these stocks. The market has two faces. One, which is facing the government, which is capital intensive and other facing the consumer which is booming and you can’t complaint about them. Q: Do you think this pessimism could drag the markets lower from these levels or we could remain in the range that we are trading now?
A: FIIs will decide where the broad market will be. If FIIs start selling the market will dip and if they don’t sell then the market will stay at level where it is right now. People are waiting for some positives whether from monetary, political, economic policy front. Somewhere something should happen. Q: With results of HCL Tech, TCS, Wipro and Infosys out which stock will you pick and which stock you will exit?
A: I am holding on my Infosys purchase. TCS has been outperforming everybody and has interesting forecast. So, now the choice is whether one should switch from Infosys to TCS, I am sure many people must have done it. Somebody has to do the hard thinking and do that, I have not done it yet. Q: There are murmurs of partial or full diesel deregulation by the government. How much pushed to the corner do you think the government is and how soon do you think we could hear about some sort of news on this account?
A: Diesel decontrol will come faster if rupee touches 55. Diesel and petrol are imported items which hit the balance of payment. The import is pressuring the rupee-dollar parity. 
This decision should have been taken much earlier. After decontrol, exercise of decontrol is more important. Diesel at an economic level has already been decontrolled. Now, it has to be exercised that market pricing happens. Q: How do you expect flows into the equity markets to pan out? April has been completely dry?
A: We are still struggling with recent retrospective amendments and GAAR provisions. Flows indicate that people are still not giving up on India. In global comparison, India is still standing out as very compulsive investments. We are not seeing any major selloff.
We have good number of stocks which are doing very well and are not impacted by government policies and we have a huge consumer base. India growth story is still on. One should not wait to see which way the flow is moving. On the other hand, we should focus on stocks and companies which are reasonably priced and lay our bet. Q: What is your view on telecom stocks?
A: At present it is best to stay way from telecom stocks. With the new regulations there are chances that 122 licences will be cancelled. PIIs will not show interest with the prices that are put up.
If it is implemented without any much change and if they bring this particular law, I think this law itself will consolidate the industry in a big way and we will have one of the highest rise in the telecom services prices in next three-four years and only two-three players will be left.