Indian economy would benefit from coronavirus outbreak: Pankaj Bobade

We are of the opinion that the Indian economy would benefit from the coronavirus outbreak, Pankaj Bobade, Head- Fundamental Research, Axis Securities, said in an interview with Moneycontrol’s Rakesh Patil.

Excerpts:

Q. With coronavirus fears mounting up in India and other countries, how much will it impact the Indian economy?

A. Given that the coronavirus spread levels in India are very low and the tropical atmosphere acts as a natural immunity against viruses, we expect limited impact on India’s economy, considering our country's limited presence in global supply chain and not being a major exporter to the global markets. It would be benefiting from a fall in global crude prices, shift in supply chains away from China and fall in US Treasury bond yields.

Q. How do you look at the IPO market? Will SBI Card and other IPOs help to revive investor’s sentiment?

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Pankaj Bobade

Head of Fundamental Research|Axis Securities

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A. The IPO market will perform similar to the larger economy and will not be immune to it. Strong individual IPOs, like SBI Cards, may still see a good response, but will feel the pressure of the larger economic conditions upon listing. Reviving sentiment for primary market is unlikely in the near term.

Q. Global central banks cut their interest rates, will RBI announce an emergency rate cut?

A. Global central banks have cut key rates due to the economic impact of coronavirus. Crude oil prices, one of the inflationary forces, have cooled off; soft crude prices are expected to come to the aid of the RBI MPC when they meet next time in April 2020.

Taking the cue from the global central banks and softer crude prices, RBI is expected to see through the transient inflationary forces and cut policy rates, though it would not be an emergency cut.

Q. Do you think that the current correction is a very attractive opportunity for investors? Which 3-4 midcap stocks will you bet on?

A. We look at the recent correction from a ‘glass-half-full’ instead of a ‘glass-half-empty’ perspective. We are of the opinion that the Indian economy would be a beneficiary of the coronavirus outbreak. The event would force the multinationals to redraw their supply chain strategies so as to reduce disproportionate dependence on China, and prevent the disruption of supplies in future due to any country-specific event. India is expected to benefit from this development.

Correction in crude prices augurs well for the forthcoming rate cut, thus helping the interest rate sensitive sectors. We like select private banks (both retail and corporate), consumption plays (staples and discretionary), speciality chemicals etc. from medium to long term investment horizon.