Should look to buy Nifty; 7540 best support: BP Singh

In an interview to CNBC-TV18, BP Singh of DHFL Pramerica Mutual Fund shared his reading and outlook on the market and also gave recommendations on various stocks.Below is the transcript of BP Singh’s interview with Latha Venkatesh and Reema Tendulkar on CNBC-TV18.Latha: Coal India came out with its earnings over the weekend and it was a mixed performance. While the realisations were weak the volumes offset the e-auction realisation drop. How would you approach Coal India now because it has been showing strength off late?A: We would not like to comment on individual stock but if I look into the entire segment, the Indian market now is set for a consolidation phase for sometime before it actually gets out. So, we are in the last miles.Most of the results which are coming out, which are appearing to be disappointing in this point in time, in our opinion in the last phase of corrections and so therefore most of these companies we are positive on though I would like to refrain from commenting on individual stock.Latha: More in terms of a trend then, do you expect that 7,540 level to hold now?A: Yes of course because if you look into the Indian market, practically every negative news which we were talking about in the past, is now gradually turning into positive. I think we have ignored a small information which came from an interview from somebody from Moody’s that India could be an upgrade candidate in future and that is something which indicates the kind of strength which we can see in the Indian economy.As far as the global system is concerned, once the US rate hike takes place, most of the negatives which people are seeing in the global market will be behind us and that is what will signal the positiveness about India. So, we do not see 7,540 in anyway going to breached and we think that that is the best possible support at this point in time and in fact one should be looking to buy at that level.Latha: What is in your radar in terms of purchases?A: In terms of purchases at this point in time we think that what is happening is the government expenditure is going ahead very strongly and the overseas company expenditure is going to pick up if at all there is any signal that Indian economy is going to be upgraded. The private sector investment will take time which is about two to three quarters down the line from here. So therefore one needs to focus on where the government expenditure plays a role. So the road construction, the power sector, the capital equipment whatever needed over there, these are all the areas where the growth is going to come and that is where we are focusing.You are mentioning about the banks, the public sector banks and some of the private sector banks is another sector where we are going to focus on in terms of picking the stocks. Vis-à-vis pharmaceuticals, there will be selective stocks which will pick up. We are not excited about the entire sector at that particular place.Finally the IT where completely the US economy focused IT companies are the ones and where the digitisation percentages are high, the areas where we are focusing on to construct the portfolio. To just preempt your question, what we are going to avoid in this period is the entire commodity basket and the realty sector.Reema: What about the consumer discretionary spend because this is the time when spending generally picks up with the onset of the festive season? Would that be an attractive buy for you?A: Not really. You are right that little bit of consumption pick up takes place but what is happening at this point in time in the economy since last few months is that the withdrawal of lot of black money in the system, the black money is getting blocked and with the real estate sector, which is now under tremendous pressure, there is a huge amount of discretionary money which is blocked over there.We are seeing rural economy demand is not yet picked, it is going to take time so therefore the discretionary is one sector where we are avoiding. Besides that, the onset of online sales which is started which is also eroding the margins of some of the players over here. So, keeping both these aspects we are just avoiding this particular sector for the time being.