The pre-election wave hitting India is hinged upon common economic agenda across political parties, which is lapped up by Indian investors leading to a rally. Speaking about the commonality, Ajay Srivastava of Dimension Consulting told CNBC-TV18 that there is no basic difference in economic agenda of Bhartiya Janata Party (BJP) or Congress as both have vowed to follow fiscal prudence. Replacing wasteful government expenditure with meaningful ones will be appreciated irrespective of political colour, he said. Speaking to CNBC-TV18, Srivastava also clarified that it was not clear which party will get a thumping majority.
Also read: Third front experiment will prove costly for India: ModiHe advised investors to stick to defensives for the time being. Srivastava finds Infosys and Tech Mahindra undervalued compared to its peers and believes pharma sector is riding on three big companies. He warned against veering towards midcap IT or pharma space as both these sectors see volume specific actions, where midcaps companies will be sub-par. In financial space, he says YES Bank and IndusInd are value buys.Below is the edited transcript of the interview.
Latha: What is the overall sense on the Nifty that you are getting? We had a great finish on Friday but today the global cues are looking quite negative?
A: We are in the middle of a rally at this point of time because no matter what the negative news is, the buying interest continues not on the trading side but on the investment side. Cash deliveries continue to be extremely strong. Since January, the cash delivery has been very strong. Now the Crimea issue has come up, that will have a negative effect, we will see some profit-taking but the undercurrent is that it is a strong market, it is a bull market running and people with cash to take delivery are the ones in the market, not the traders.Latha: Let me start with the autos stocks. Are you impressed by the numbers. There seem to be some green shoots as Sonia put it. Would any of them be in your buy list?
A: Maruti Suzuki was in the buy list but Maruti has to come out with the problem with the Gujarat plant. They have done a lot of disservice to the small investors. They have really tried to cheat the people and that’s what holding the price back.
Otherwise, there is no reason for Maruti to see another 10-15 percent upside in the price. The pure uncertainty around this is keeping the investors away. Mahindra and Maruti, the two M’s would be the best buys in the market. If you not already in Tata Motors.
Sonia: How much of it is a pro Modi trade or how much more of a pro Modi trade you think this market could eek out because after the Bharatiya Janata Party (BJP)-Lok Janshakti Party (LJP) alliance the market has got very excited on the thought of new alliances etc. How are you positioned on this election trigger?
A: We are positioned to be on the positive side, not because of Modi-wave but beacuse of the fact that at the end of the day, the two main parties – the Congress and BJP have absolutely similar economic agendas. So, it doesn’t matter who comes to power because as seen in the Telangana case, they got together and got the bill passed. Everybody else had to stand outside and watch, everybody else opposed but these two parties came together.
So, the mood in the market is that no matter who wins the election and while I don't think it will be as clear as a Modi-win or a Congress wipeout, the bottomline is that from an investor perspective, both are following the similar economic policies and the good part of the policy is fiscal prudence.
The political situation is a common economic policy across the broad spectrum in the political arena which makes enormous sense for India as well as the equity market. I do not care who wins. I think they will follow the same policy.
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