Frontline indices have fallen over 12 percent from the record highs seen on August 29, 2018
An array of negative news pummeled the market in the past one month and now the news seems to have been priced in, believes Tushar Pradhan of HSBC Global AMC.
“While it is difficult to call if the worst is over, we have had the perfect storm of bad news, both local and global. The silver lining seems to be earnings, which look optimistic going into this quarter,” Pradhan, CIO-India at HSBC Global AMC told CNBC-TV18 in an interview.
He further highlighted that the on-ground situation is turning positive and that there is valuation comfort as well due to the correction. Going forward, he expects companies with robust growth to perform well.
For the uninitiated, frontline indices have fallen over 12 percent from the record highs seen on August 29, 2018. Global trade war concerns, weakness in the rupee, rising crude prices along with a decline in financials weighed big on the indices. Liquidity concerns in NBFCs after the IL&FS defaults also dragged the market.
Pradhan gave views on multiple sectors during the chat. Here is a gist of what he said.
According to Pradhan, tech space is likely to perform well as gross domestic product (GDP) growth in the US has been strong. “The sector is looking at a tremendous opportunity. The tailwind to its current earnings is also the weaker rupee. Going forward, there could be some earnings upgrades as well,” he told the channel.
The recent downward move is an effect of soaring valuations in the consumption space, he said. Having said that, fundamentally, the sector continues to be strong and one needs to take into account the term of investment. If one is investing from two-, four- and five-year perspective, then the sector can be looked at.
Pradhan believes private sector banks have a much better quality of asset book and asset-liability mismatches are better managed. He urged investors to look at the long term potential even if there are events that play out on such names.In case of NBFCs, he said that the investor confidence has been hitting the stock prices and not liquidity concerns. There is no common trend for the sector in general and one needs to look at it on an individual level.