Early polls plus reforms to aid mkt; shun PSBs, realty: UTI
As far as economic reforms are concerned, the ball is now in government's court and the Reserve Bank of India cannot do much except for taking care of the currency market, says Lalit Nambiar, SVP & Fund Manager Head-Research - UTI AMC.
September 13, 2013 / 09:03 IST
Along with global events like Fed tapering of QE and conflicts in Syria, one key upcoming local event that will impact market sentiment is 2014 elections. Most market experts believe that early elections could prove to be a huge positive for the market, but Lalit Nambiar, SVP & Fund Manager Head-Research - UTI AMC says the positive sentiment could fade quickly unless followed up by structural reforms.
In an interview to moneycontrol.com, he said, as far as economic reforms are concerned, the ball is now in government's court and the Reserve Bank (RBI) cannot do much except for taking care of the currency market. So, one should not expect the central bank to cut rates in its September policy. Nambiar is underweight on rate sensitives. The fund house chooses to stay away from infrastructure, public sector lenders and real estate stocks for now.He is betting on export focused sectors like IT, pharma, consumer and select utilities. "Pharma valuations are fair in the sense that there is dearth of growth in other sectors barring IT, and yes we are overweight these sectors," he added. Also Read: I am positive on India, says Rakesh JhunjhunwalaBelow is the edited transcript of Lalit Nambiar's interview with moneycontrol.comQ: The Nifty has managed to pullback from 5100 level to about 5400 now. So is the worst over for the market or is this rally only fueled by short covering and pain is in the offing?A: The short term will depend on global liquidity and the FII view on the rupee, which seems to have stabilised somewhat at the moment. With a vulnerable CAD the market will be range-bound with the climb-down of events in Syria providing some relief. Q. Do you agree that early elections will be beneficial for the market? Is that the only key trigger investors should be watching out for? A: To some extent early elections can help sentiment, but if not followed up quickly by structural reforms we will have problems.Q. How are you playing rate sensitive’s now? Are you expecting the central bank to hike rates in its September policy? A: We are underweight rate sensitives. We do not expect a rate hike as the ball is clearly in the government's court on economic reform and RBI can do little except firefighting in the currency market.Q. What is your year-end target for gold? Has the recent rise seen in gold price attracted more investors towards gold ETFs? A: We expect gold will appreciate with the rupee depreciation. While there is a pick up in demand for gold, there is a shortage of physical gold, so there have actually been some withdrawals across gold ETF's.Q. Most market experts have been advising investors to hide in Pharma and IT stocks. What is your take on valuations of Pharma companies? Are you overweight on these sectors?A: These sectors make sense as they are export focussed. Pharma valuations are fair in the sense that there is dearth of growth in other sectors barring IT, and yes we are overweight these sectors.Q. Which sectors are a complete avoid for you right now? What sectors are you betting on?A: At present Infra, PSU banks, realty are avoids. Our bets are on IT, Pharma, Consumer and some select Utilities.Q. What is your outlook on the rupee? A: Given the global volatility and the vulnerability of our current account we are looking at a wide range of between Rs 62-70/USD over the next 12 months. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
