Going forward, the monsoon, March quarter earnings and global macro headwinds are seen taking over from the Karnataka polls as the main sources of cues for the market.
Even as trends from the Karnataka assembly election show the Bharatiya Janata Party (BJP) to be leading, experts like Gautam Chhaochharia of UBS Securities are in wait-and-watch mode.
"Even if this translate into wins for the ruling party, the alliance formation is an unknown event. This will provide clarity to the market in the next couple of days," Chhaochharia told CNBC-TV18 in an interview.
Going forward, he expects the monsoon, March quarter earnings and global macro headwinds to take over from the Karnataka polls as the main sources of cues for the market.
Speaking on the wariness among foreign investors about the probability of the ruling party returning to power in 2019, Chhaochharia believes that a lot of FIIs are not worried about any hindrances to Modi's return next year.
"Keeping that in mind, going forward, the situation will depend on global factors even as on the local front debate between macro headwinds and liquidity will continue," the expert said.
On a sectoral basis, Chhaochharia said he likes select names in consumer-driven segments, non-banking finance companies, and companies in the automobile space. These look well placed to cash in on rural recovery in the second half of the year, he said.
Among NBFCs, the expert believes that rising interest rates could create big headwinds for NBFCs, but only if they rise by a significant amount. Small finance banks and microfinance institutions also look well placed, he said.Meanwhile, Chhaochharia is also betting on private retail and corporate banks. But his big overweight call is on the IT sector, along with select auto and real estate names.
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