BNP Paribas will selectively look at private sector banks, Manishi Raychaudhuri of BNP Paribas told CNBC-TV18 on June 13. He added that many banks are not as expensive as they used to be.
Raychaudhuri also said that investors will have to brace for more downside in the near term. He noted that based on the earnings downgrade, the market could go as much as 15-20 percent lower, CNBC-TV18 reported.
“There's a downward risk to earnings estimates. If we have a situation where recession looms large and recessionary or stagflationary issues then at some point of time this momentum of severe monetary policy tightening could temporarily ease and provide cushion to the emerging markets’ risk perception that we see,” he noted.
Raychaudhuri said that select banks, IT services – especially front runners - and market leaders in the consumer discretionary segment are the “broad silos” they are looking at in India. Plus, energy is a sector that is benefitting across Asia and emerging markets, and in India you could tap that through conglomerates and pure players.
Manic markets
Dalal Street witnessed an awful start to the new week this Monday morning as the market corrected over 2 percent tracking global peers in the wake of red hot US inflation print released on Friday sparking fears of more aggressive interest rate hikes by the Federal Reserve.
Also Read | Market sheds 2% in early trade amid worries over US inflation, Indian CPI data
Sensex was down 1,448.13 points or 2.67% at 52855.31, and Nifty tumbled 414.10 points or 2.56% at 15787.70. About 508 shares have advanced, 2428 shares declined, and 105 shares are unchanged.
All sectors were trading in the red with realty and financials down over 3 percent each while midcap and small cap indices shed over 2 percent each.
Rupee slides
Further, the Indian rupee on June 13 weakened beyond the 78 mark for the first time to hit a fresh record low against the US dollar, tracing losses in global equities and currency markets. The continuous outflows by foreign investors into the local equities and surging crude oil also dampened the sentiment.
At 10 am, the domestic currency was trading at 78.22, down 0.48 percent from its previous close. The home currency opened at 78.12 and hit a fresh all-time low of 78.28 a dollar.
Also Read | Indian rupee at a new low, 4 factors working against the currency
The root cause of the rupee’s distress can be found in elevated oil prices, as India meets almost 85 percent of its fuel needs through imports. The country’s crude oil basket price has risen to a decadal high to top $120 a barrel now.
FII's sold $23.87 billion in domestic equities so far this year amid higher crude that continues to stock worries about higher inflation and fiscal deficit.
Global markets plunged after the inflation shock on June 10 raised speculation of a more aggressive rate hike by the US Federal Reserve, which meets this week.
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