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Finally the Nifty50 hit its much-awaited psychological 11,500-mark for the first time in the opening tick on Monday and is trading decisively above that level. Even the Sensex is trading with around 300 points gains, backed by banking & financial services.
The recovery, or stabilisation, in the rupee also caused buying interest in equity market on Monday. The Indian rupee appreciated by 30 paise from all-time closing low of 70.15 against the US dollar on Friday.
"I don't see any harm at the moment, the rupee has done its course for short term but will wait to see stabilisation in the currency market. So a little bit skeptical currently," Andrew Holland of Avendus Capital said in an interview to CNBC-TV18.
The research house is actively working on its hedging strategy but has not changed its portfolio.
He said India stands out with domestic-driven economy despite US-China trade tensions globally, though there could be short-term reaction on currency.
But if global growth comes back on track, then there could be higher interest rates (which are likely later this year), then India could be relative underperformer, he feels.
IT Sector
The IT sector is the biggest outperformer among sectoral indices this year as Nifty IT index gained nearly 30 percent year-to-date following better earnings growth in Q1 and companies guided for out better growth going ahead in FY19.
Holland said lot of problems had hit these companies in the past but not fully gone. "The sector is in transition mode and I see reasonable growth for the sector. I am constructive on IT sector."
Corporate Banks
Private as well as PSU banks rallied in June quarter earnings on hope of likely bottoming out of NPA cycle soon.
Holland said whole thing about NPA slowing down, recoveries happening and expectations related to that are priced in now.
He feels private banks will do very well but he is still skeptical about PSU Banks as balance sheet clean up is yet to happen and he sees some headwinds for short term.
"The relief rally could be seen on expectations of NPA slowdown, etc. PSU banks are tempting to look good but not taking any exposure," he said.
Consumption
Holland still sees opportunity in the consumption space. "Over the long term, consumption story has to play considering likely top line and bottom line growth."
This is a story for the next 3-5 years and any setback would be opportunity to buy, he believes.
Pharma
"I just can't force myself to go for this sector," Holland said.
"Yes it is beaten-down sector and it is at level where the IT sector was 1-1.5-year ago. But I am not convinced right now fundamentally to buy these stocks due to US pricing pressure," he added.
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