In telecom space, all bad news is already priced in and no bad news is expected in the foreseeable future with regards to business environment or pricing, Ajay Khandelwal, Head PMS, Globe Capital Markets tells Moneycontrol's Sunil Matkar.
Q. How do you expect the market to behave in the coming weeks if we exclude the key risk of coronavirus?
A. The markets appear to be in a longer duration time-wise correction. Corrections in recent years have been of short duration and sharp.
Q. Do you feel India could find it difficult to achieve the $5 trillion target by 2024 if coronavirus impact continues for one more quarter?
A. It would not be proper to judge growth over four to five years based on the impact of an event that is likely to last for a quarter or two
Q. What are your thoughts on telecom space, though expectations are that India could be three or two players market going forward?
A. All bad news is already priced in. No bad news is expected in the foreseeable future with regards to the business environment or pricing. Good news if, as and when it comes is yet to be factored into share prices.
Q. Insurance business has been growing rapidly and is expected to grow in the same level considering the opportunity lies ahead. What are your thoughts?
A. The growth might continue at a reasonable pace, albeit, it might get dampened due to macroeconomic factors that might affect disposable incomes.
Q. Do you think valuations are demanding in IT space considering the nature of business and margin profile and also given the global environment?
A. IT companies will continue to do well selectively.
Q. Most analysts are very selective in banking and financials space due to asset quality concerns and economic slowdown. Are you also very selective, then why and what is your pecking order?
A. Yes, one has to be selective when making investment decisions on individual companies within a sector. Good companies at a reasonable value are desirable. Some of the perceived quality companies in the sector appear to be overvalued while those expected to make a comeback may be in the form of improved quality of management or writebacks on bad loans may be undervalued by the markets.
Q. Do you feel the SBI Cards IPO will revive primary market sentiment going ahead as it is the biggest IPO of the current year?
A. Certainly, the mood is upbeat on such IPOs from well-managed companies. Investors have always bid for such IPOs with great enthusiasm.
Q. What is your take on Q3 earnings season? Does it indicate any recovery sign in coming quarters given the government measures and global environment?
A. Earnings surprises and misses have been evenly matched for this quarter. It has been a mixed bag but the big earnings revival seems to be around the corner. The factor which has effected earnings growth in a big way appears to be fiercely competitive pricing adopted by businesses belonging to practically all the sectors.
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