Rahul Chadha, Co-Chief Investment Officer, Mirae Asset Global Investment does not expect the US Federal Reserve to significantly taper its bond buying programme in the near-term.
In an interview to CNBC-TV18, Rahul Chadha, Co-Chief Investment Officer, Mirae Asset Global Investment recommends buying on dips and stick only to quality companies.
He continues to bet on IT and pharma stocks and is selectively looking to buy banking stocks. On the flipside, he is underweight on consumer staples and is avoiding companies with stretched balance-sheets.
Meanwhile, he does not expect the US Federal Reserve to significantly taper its bond buying programme in the near-term.
He further added that the Indian currency can weaken another 4-5 percent, but it is unlikely to see return to levels of Rs 68-70/USD.
Below is the edited transcript of Rahul Chadha’s interview with CNBC-TV18
Q: Do you think that much of the gains to be had from this BJP victory of sorts that we have seen take place on Sunday have already been had by this market place. Do you still see further momentum that is available between now and the general elections next year?
A: We have had a good rally from late August and the Sensex is up nearly 18-19 percent from those levels. We have also seen some bit of profit taking. The outcome of state elections is a very positive verdict. It gives lot more comfort on what is expected of the general elections. Should we see BJP wining those elections, we can get decisive leadership which can boost the investment climate in this country. Overall, I would say that we would be a buyer on dips in this market, but we would stick to quality and would not go down the curve because we are yet not fully out of the woods.
Q: Would it be stock specific, would it be sector specific here?
A: Clearly stock specific. We continue to like IT because there is a school of thought which says that rupee can appreciate very strongly but we do not believe that, import cover is still six-seven months, which is far below the comfort level. We have seen strong demand momentum for these companies. We are overweight on IT. We like pharmaceuticals. We would be under weight consumer staples, while trying to put that money in financials, private sector banks or some beaten down metal names.
Q: Would money then go back to some of these defensives from some of these recent outperformers like cyclical's?
A: We would be reluctant to go into companies which are extremely leveraged or have high amount of debt for the simple reason that the election verdict is not 100 percent certain. It would take a while for those stretched balance sheet companies to repair their balance sheets. It would take atleast one or two years for those companies to come back on the growth momentum.