Suveer Chainani, CEO of institutional clients group, and Sunil Tirumalai, head of research and equity strategist, Emkay Global Financial Services, shared their views on stocks ahead of their India Conference that kicks off tomorrow in Mumbai.
Chainani said cash levels in funds are going up and people are waiting and watching because valuations on an aggregate basis are still not attractive.
Tirumalai said there have been more downgrades than upgrades in terms of earnings. “If you look at the results that have come out till date, for Nifty stocks, we are standing at about 5.5-6 percent earnings growth. The full expectation on Nifty for consensus is about 30 percent and if one looks at the bridge from FY19 to FY20, three stocks have accounted for two-thirds of the growth – Tata Motors, SBI and ICICI Bank,” he said.
The valuations for Nifty are still high, said Tirumalai, adding that in their alpha portfolio they still have big overweight on cash, about 4 percent cash in the portfolio.
In their high conviction list of ten names, there have been changes. They have replaced SBI Life with ICICI Pru Life but SBI Life still remains as a recommendation in their Nifty portfolio, said Chainani, adding that they have an equal-weigh rating on Bajaj Finance.
With regards to the auto space, Tirumalai said that autos is the biggest underweight in their portfolio although Mahindra and Mahindra is one name where their analysts are reasonably positive. They do not expect demand for auto to revive immediately, he added.
On pharma, Tirumalai said they are selective and overweight on Cipla, IPCA and Divis and not the entire sector, while Dr Reddy’s is a top sell.Source: CNBC-TV18