Sheth said there is uniformly bad news or trouble looming on the horizon with sluggish domestic and global macros.
Weak macroeconomic data, the stress in the financial system and sluggish global macros are behind the ongoing selloffs in the stock market, said Dipen Sheth, head-institutional research for HDFC Securities.
"We see troubled times and this is not just driven by some kind of sentimental downtick in the stock market, there is a big macro picture behind the softness that you see reflected in the markets, and the Modi 2.0 excitement and all that has fizzled out," he said.
Sheth said there is uniformly bad news or trouble looming on the horizon with sluggish domestic and global macros. "You look at consumer sentiment in India, you look at the macros in India below 6 percent growth print. You see persistent stress and stumbles in the Indian financial system which is like the lifeblood of the economy like in any other economy. That is reflecting across classes of the financial system," he added.
"A lot of crucial reforms are also in the pipe and we are not seeing much action there and if at all this wasn’t enough, we have seen some bad misses early in the Q1 result season," said Sheth.
According to him, this is the kind of situation that leads on to excellent investment opportunities. "I am waiting for a lot of experts to tell me that the world is breaking apart and there is going to be no tomorrow. I suspect that will be the time to begin buying," he further added.
June quarter earnings
Dabur India's numbers were positive but, like the management said and alluded to in their communication with investors, these are probably not sustainable, said Sheth. "They have delivered volume growth, which is way ahead of anybody’s expectations and ahead of a stalwart like Colgate Palmolive. It is a great story, we still have a buy. Does it make sense to buy now? I will say certainly yes but do not expect outsized gains. You could see a downtick before you see a meaningful uptick there,” he said.
In terms of autos, he said, “Autos went through a terrific ride two years ago. End of the day, it is a cyclical sector to invest in and everything was going right for them, soft fuel prices, falling interest rates, increased availability of financing, better infrastructure, giving the opportunity for people to buy motorcycles in the rural interiors or trucks for intercity commercial transport and so on, consumer sentiment running high which was driving up car ownership – all of that has turned around, you have gone through emission norm hurdles, you have gone through anti-lock braking system (ABS) hurdles, you have gone through higher interest rates, you have gone through non-banking financial companies (NBFCs) running out of refinancing options on the liability side, all of that has come together. I suspect this will bounce back not in the foreseeable future but over a period of time.”
“There are very good companies out there, whether Maruti Suzuki or Bajaj Auto or Hero Motocorp – when things go through a difficult phase then the people to back are the resilient people and not the aggressive midcaps. So we do have a buy even today on Hero,” Sheth added.
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