With regards to IT, the tailwind on rupee continues to sustain, said HSBC Global AMC's Tushar Pradhan.
Markets tend to overreact from true value picture but the midcaps and smallcaps look attractive at the current juncture, said Tushar Pradhan, chief investment officer, India, HSBC Global AMC, in an interview with CNBC-TV18.
"Over the long run, if anyone one wants to enter the space, this can been looked at in hindsight as a good opportunity because most of the companies have dropped on an average 20-30-50 percent in some cases," he said, adding that, with this huge drop in valuations and earnings remaining sustainable, this could be a good time to enter the space from 2-5 years perspective.
With regards to consumption space, he said one of the positive cues in terms of consumption expenditure is the recent move in the Budget to provide direct income support to the farmers. Moreover, if one is looking at visibility in earnings and growth in sales compared to other spaces, the market seems to be lopsided in favour of visibility and that is why consumption space is getting premium in valuations. "I won't bet on these valuations going off very soon to come back to normal," he said.
Sector specific, the higher consumer discretionary in items like cars, the consumption theme is not playing out both locally and globally. The slowdown is not so evident in capital goods space, he said.
However, people would rather wait to see how the elections progress, the political landscape changes and to have more certainty around higher cost consumptive items. "So, consumer discretionary will be a little bit of a pause before we get direction in terms of where it goes," said Pradhan. However, that is not negative from a stock picking perspective because in some segments valuations are getting attractive.
With regards to IT, he said the tailwind on rupee continues to sustain. Also, inherent business strength for the companies has been strong because IT is largely US-centric, and the US economy is still likely to grow at 3 percent.Source: CNBC-TV18