With markets close to all-time highs and full focus on how goods and services tax (GST) will impact equity market, the monsoon impact and global cues, CNCB-TV18 spoke to Anish Tawakley, Head of Research at ICICI Prudential AMC to know how they are looking at all these developments in terms of equity investments.
He is a not a big fan of consumer stocks not only because according to him there are likely to be some disruption for the sector due to GST, but also because they are fairly expensive. Margins for them are also at all-time highs, while volumes have collapsed. All these are not good signs and aer similar to what happened in early 2000’s where they went through long periods of earrings sluggishness.
He is also less bullish on the profitability sustaining for the housing finance space. He says the growth for them could be good but a lot of that is priced into valuations already. They are trading at expensive valuations.
However, IT and pharma remain a contra buy for the house says Tawakley backed by conviction that the EPS growth could be strong and they could see high multiple earnings on back low expectations from them.
Telecom space is also a contra bet for the house but with a long-term view. According to him, it is possible that only few strong players will survive. So one can look for value in them.
The financial space can be played through large corporate banks with a good franchise on the back of industrial recovery, says Tawakley.
Is of the belief that returns for the market are likely to be modest because valuations are stretched and it is not yet being backed by earnings growth, which too is modest. Moreover, some disruption with regards to GST is expected.
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