Global shocks aside, basic premise of bull market intact: Mehta

However, he is not so upbeat on sugar space and said it is more for traders to look at.Below is the verbatim transcript of Dipan Mehta’s interview with CNBC-TV18\\'s Anuj Singhal and Reema Tendulkar. Anuj: How do you see the current situation, a buying opportunity or do you think markets need to correct more whether the trigger is global or not? Do you see more correction going forward? A: That is a tough one to answer. After having observed how global factors affect our markets it is extremely difficult to call exactly when the markets will turnaround depending upon stability in the global markets and these are factors which in a way are beyond understanding also. Suddenly you will see Asian market selloff, European market selloff and then they somehow stabilise and we see fund inflows coming into our market. So, difficult to say. All that we can say is that the basic premise of this bull market remains intact. We are looking at good monsoons, Goods and Services Tax (GST) passage as well as definite turnaround in the corporate earnings growth rates and those are firmly in place which means that as soon as the turmoil in the global market settles down we should see our markets resume that upwards journey. Reema: So, to prepare our viewers for the possible uptrend once the global volatility comes to an end which would be the key themes you would play, would you be interested in logistics considering there is a higher chance or probably considering the GST bill getting passed in the Monsoon Session or would you look at monsoon plays? A: Monsoon of course the obvious winners are known the agro chemicals, the fertiliser companies and FMCG companies which have got rural outlay. But the GST is also a very nice theme that one can play on and apart from the logistics companies which are fairly valued there are a host of companies which compete against the unorganised sectors like say, the plywood manufacturing companies, or the tile manufacturing companies and then there are home electrical, home appliance companies. These are competing with unorganised sector and with GST coming in they should be able to rapidly increase their market share. So, that is one theme that investors could look at and the companies which fall within that theme are stocks like Centuryply, Greenlam, Greenply and then there is Kajaria, HSL, some of the other tile manufacturing companies, appliance companies like Symphony, Havells, V-Guard. They are all competing against the unorganised sector or the common thread between all these companies and with overall improving consumption trends and GST coming in place which means that they are at par with the unorganised sector they should be able to gain market share. So, these companies will be able to grow significantly faster over the next two-three years once GST is passed and valuations over there are still quite reasonable. So, that is an investment theme which we are tracking and which we are investing for ourselves and our clients as a measure of disclosure. Anuj: Pharma has seen volatile times. It has been stock specific of course, but you think there are opportunities in this space? A: Pharma is in tough terrain and although it was a favourite sector of our we should be looking at - at least getting underweight over there. At least incremental flows may not be diverted to pharma and it is getting very selective for various reasons. Some related company specific, some related to industry. But still it is a large industry group and one needs to be invested over there. So, I would say the four companies in which we are invested and so have our clients which we still feel that they will be able to outperform the markets and the industry as a whole. Stocks like Aurobindo, Natco Pharma, Strides Shasun and Torrent Pharma all these companies came out with very good set of numbers and the management spoke very confidently of the next 6-12 months for these companies as well. So, these are the outperforming four companies in the pharma sector and you are much better off in these companies, than some of the larger ones say, like Cipla, Dr Reddy's or Lupin or Sun Pharma for that matter. Reema: Generally you don't talk about sugar but considering that raw sugar prices have gone up by more than 50 percent in the last few months and sugar stocks itself are sitting at fresh 52 week highs after the run up have you looked at the fundamentals of sugar and therefore is that a sector or any stocks there which you would recommend? A: No, again despite the upswing which we have seen in sugar stocks we have not really taken that sector under our coverage and it is great for traders. It is great for industry insiders who are aware of what the trends in the sugar industry are and how high international and domestic prices can go and how the government response will be because those are the nuances which govern this industry. So, people who are into these nuances are able to understand the micro trends within the industry are best placed to play it and outsiders such as ours will always be at a disadvantage. Traders on the other hand can look at price volume action and ride the train so long as it is moving and chugging along ahead. But for long term investors and portfolio managers like us it is really a sector which still needs to be avoided. We are all aware that the historical track record of these companies to create value or growth or returns for shareholders has been extremely negative. So, still I would like to avoid the sector although there are short term opportunities for traders there.