'Investors cautious on India in near term but good time to do cherry-picking'

Markets - Image: Reuters

Bulls still have upperhand at Dalal Street as the Sensex hits fresh record high of 36,902.06, and the Nifty trades above 11,100-levels. After the correction in February and March, the market has been gradually moving upwards though with volatility due to reasonable valuations and expectations of healthy earnings growth from FY19.

But the rally has been restricted to only largecaps and not to the broader space. The Nifty Midcap index lost 13 percent and Smallcap shed 22 percent in 2018 against 47 percent and 57 percent rally, respectively, in 2017.

Sunil Singhania, founder of Abakkus Asset Management still sees opportunity in the current market condition. "Ups and downs in midcaps is a part of market life cycle and since January, stocks corrected 20-50 percent but there has been a bit of stability in last one month, though individual stocks look scary."

He feels it is good time to do cherry-picking now till September 30, 2018 as there is an optimism as far as economy is concerned.

In an interview to CNBC-TV18, he said investors are cautious in the near term not only on India but also on US due to geopolitical tensions, trade war, and now currency war building up.

Related stories

Sunil Singhania

Founder|Abakkus Asset Management

• 
  Time to look at firms that can manage their high debts than cash-rich firms, in all-time low interes...
• 
  'Still prefer large corporate banks, financially leveraged companies for Samvat 2076'
• 
  Earnings, economic growth to move markets in the long term: Reliance Capital's Singhania

Cement

In the cement space, southern region has seen oversupply and the volume growth has been better.

He expects the pricing power to return due to lot of spending on housing and infrastructure sectors. So, ACC like companies will do well, he feels. "Valuations are decent levels. Most cement stocks barring a few are trading below USD 100 per tonne compared to global peers that are trading more than USD 150 per tonne."

Consumption

In the consumption space, there has been a mixed trend but looking at demography of India, it is going to be a strong theme, he said, adding stocks in this space have seen great rally despite recent market correction.

Auto

He said there is a little bit of concern in the 2-wheeler space after Bajaj Auto comments. "Companies which are strong at entry level segment will have pressure on margin but there is some relief due to fall in metals prices."

He is positive on commercial vehicle space despite likely increase in loading capacity, as he feels there is inherent demand for vehicles. "There would be scrappage policy coming in which will offset reduction due to loading capacity."