Moneycontrol
Last Updated : Mar 09, 2018 12:21 PM IST | Source: Moneycontrol.com

Focus must be on earnings recovery; staying away from pharma: BOBCAPS

In the short term, issues hitting the market were negative news flow back home involving the big banking scam, while trade tariffs and interest rates affected the Street globally, Ratnesh Kumar said.

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While the market continues to react negatively to local and global newsflow, experts at BOBCAPS recommend looking at the brighter side of it — earnings recovery.

“The corporate performance is getting better. What the market has waited in the past 4-5 years is finally now here and will be here for the upcoming 4-6 quarters,” Ratnesh Kumar, MD & CEO, BOBCAPS told CNBC-TV18 in an interview. The focus will be on overall earnings show and the first step to recovery has already been taken, he added.

In the short term, issues hitting the market were negative news flow back home involving the big banking scam, while trade tariffs and interest rates affected the Street globally.

Is there more correction likely ahead? Not in the long run, believes Kumar. Currently, there seems to be a cooling off effect taking place after 12-18 months of outperformance on the market. Even the flows could be cooling off in that context, he said, adding the market is just digesting these issues. “So, I don’t see a big correction. It is a pause in a long term bull market,” he told the channel.

Speaking on PSU banks, Kumar said investors will, going forward, start differentiating between the ones who will come out of this situation in a stronger manner and the ones who may not. “It is definitely not happening right now, but the market will cull out the stronger names,” he said.

Kumar remains negative on pharmaceutical space on the back of constant regulatory issues and they are hard to predict. Against them, information technology (IT) sector is better positioned to have 8-10 percent kind of growth and valuations are better there, he concluded.
First Published on Mar 9, 2018 10:47 am
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