He expects December quarter to deliver 12 percent growth, driven by automobiles. The sector could see good volume growth and steady margins, he said.
While the market may be in a cheerful mode, with benchmark indices clocking fresh record highs, the macro data is not supportive of such an upmove, Sanjeev Prasad, MD & Co-Head of Kotak Institutional Equities feels.
“December data will have a weak base from 2016 due to demonetisation. Inflation this year could touch 6 percent, crude is not at comfortable levels and there is uncertainty around GST revenues. So, the macros and market are not in a great shape,” Prasad told CNBC-TV18 in an interview.
Moreover, the market’s current move cannot be termed as extraordinary compared to global markets, he feels. “It is in line with MSCI emerging markets. It is a global phenomenon and has nothing to do with India,” Prasad added.
The positive cue to look forward to could be earnings growth, which the market currently needs. He expects December quarter to deliver 12 percent growth, driven by automobiles. The sector could see good volume growth and steady margins, he said, adding that banks may not have a very good quarter due to losses in treasury portfolio.
Among other sectors, there is disappointment seen in the pharmaceutical space, but telecom could have a bad quarter. Having said that, it expects this to be the last bad quarter for telecom and improvement is seen ahead.
Among stocks, he likes the metal basket and is looking at big deleveraging plays. “As this debt amount starts coming down, the implied market capitalisation will move up…but the sector has rallied a lot last year and the upside could be limited,” he told the channel.He also likes corporate banks as there is an expectation on resolution of NPA issues over the next few months. “These are good assets and should find good buyers,” he added.