Value buying emerging; IT, pharma good bet: Daiwa MF

David Pezarkar of Daiwa Mutual Fund says that some value buying can be seen at the current level. With the weakening rupee IT stocks look attractive as an investment option. He also says that some bluechip companies are showing good value at this level.

Below is the edited transcript of his interview to CNBC-TV18. Also watch the accompanying video. Q: Will you venture into value buying into the market at all or would you stay away at this level? A: Today's fall can be attributed to global development and negative sentiments towards Indian. We are seeing some value emerging at this point. People with slightly long-term perspective should definitely look at a number of companies which are offering good value which have significantly de-rated. But even in short-term trading a lot of good bluechip companies are seemed to be available at pretty low valuations. I think it make sense to put in 30-40% of capital at this point in time. Q: How much pressure might be left in the currency because for global investors who want to put in money it can't be comforting to see the rupee lose a percent everyday? A: The extent of the fall is quite substantial and one would expect that it would stop at this level. The rupee seems to be undervalued if you look at the REER. In a risky environment where the RBI has limited resources plus a current account deficit issue, I think that the rupee tendency should be towards depreciation but per se at 54-55 levels.  I find it difficult to see how much more it can fall from here. Crude oil of course has fallen from USD 125 to USD 11, which is a positive. Every USD 10 fall reduces our currency account deficit by around 0.5%. But then if we have a balance of payment issue because of internal issues than that will not offset the benefits because of the lower currency account deficit. So the rupee is facing severe headwinds and unless we clean up our act domestically it is not going to find favor with the foreign investors. Q: If we do see this risk aversion continue between sectors like banks, autos and even IT, these are spaces that have stocks that are still up about 20-25% since the start of the year, where would you be most uncomfortable now? A: The banking space could see some more selling pressure at this point of time. All the consumer oriented sectors should continue to outperform. Investors should look at corrective phases to invest in consumer oriented sectors and IT pharma should also outperform given the weakness of the rupee. I would be overweight on IT and pharma at this point in time.