Pharma & Chemicals also has a positive outlook in which Torrent Pharma and PI Industries are our top pick in the model portfolio, Vinod Nair, Head of Research at Geojit Financial Services, said in an interview with Moneycontrol’s Kshitij Anand.
Edited excerpt:
Q) A big liquidity booster shot came from the RBI. Do you think banking stocks are likely to gain the most from the measures?
A) They (Govt. & RBI) have provided additional support to the financial market with liquidity, lower cost of funds and NPA management. They will help the financial market to bear the negativity of a slow economy.
Monetary measures are effective when complemented with fiscal & social environment. Assuming that the virus effect will diminish by June, we feel that the monetary stimulus announced in the last 2 months will help banks in combination with the fiscal & health measures.
Q) After liquidity booster shot – do you think the market awaits a second stimulus package from the government?
A) The market is on a bear rallying which is getting extended in expectation of second fiscal package. This is likely to be higher than Rs 1.7 lakh cr announced in March. The last measure was to provide free food, cash in hand and job safety for the BPL section.
This time it may provide some tax benefits, support to MSMEs, farmers and daily workers. Though no specific benefit is expected for corporates, the government’s intention to relax economic restrictions and to open the economy in a phase-wise manner itself will provide a boost to the market.
Q) Nifty closed higher for the second consecutive week and is firmly trading above 9000 levels. Do you think the momentum will continue?
A) The sustainability of the trend will depend on the probability & time of the reopening of the economy. Today market hopes that economy will revert by July.
The recent spurt of virus cases domestically & continuity in the rest of the world is a point of concern for the market which could limit the trend in the short-term.
Whereas in the long-term improvement in health meter and reopening of the economy which be a big boost to the equity market given solid monetary, and fiscal stimulus announced in the world.
Q) What are the important levels which one should track in the week?
A) In the near-term, Nifty50 is likely to trade in a broad range between 8,500 to 9,500 levels with a positive bias amid the expectation of a big fiscal stimulus. While globally, control of virus & developments will set the momentum.
Q) What is your call on NiftyBank especially after the recent measures were announced that could benefit the banking space/Nifty Financial services?
A) The banking sector will benefit from the 2 measures announced by RBI since it added safety to the system, availability of funds, cheaper cost, moratorium and easy accounting of NPA.
The banking index is down by about 35 percent in the last 3 months. They will improve in the coming months in a combination with monetary & fiscal steps undertaken along with the reopening of the economy in a phase by phase manner.
Q) Small & midcaps outperform in the week gone by – what is leading to the outperformance? Is it the beaten-down nature or the possibility of stimulus measures that could support the broader markets?
A) Small & Midcap become attractive after the beating of the last 2month whereas maintaining outperformance will be difficult given the weak business outlook for the next 1 to 3 months.
We expect large-caps to outperform in the short to medium-term. The sectors to do well could be FMCG, Staples, Chemicals, Pharma, Healthcare, Large private banks, Agriculture and E-commerce.
Q) Any that are looking attractive for a medium to a long term time frame?
A) We are positive on large private banks in which HDFC Bank looks attractive in terms of valuation and financial stability.
We are also positive on staples & FMCG like Colgate-Palmolive. Pharma & Chemicals also has a positive outlook in which Torrent Pharma and PI Industries are our top pick in the model portfolio.
Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not that of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.
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