FMCG, pharma may fall more; bet on telecom: Nirmal Bang

Mehraboon Irani, principal and head - Pvt Client Group Business, Nirmal Bang Securities is bullish on telecom sector and recommends buying Idea Cellular despite the stock ruling at 52-week high.

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In an interview to CNBC-TV18 he says that pharma and fast moving consumer goods can see some more downside. He is negative on pharma. According to him, IT looks expensive so telecom seems like a decent bet, but Bharti is definitely not one of his preferred picks in this sector.
He continues to like Tata Motors, Motherson Sumi, Lovable Lingerie, Biocon. Below is the verbatim transcript of Mehraboon Irani's interview on CNBC-TV18 Q: You were telling me about the apathy that retail investors have at this point and continues in the market. Are you not recommending anything to buy either for a short-term or long-term at this point?
A: Over 20 years in the market, I have never seen complete crisis of confidence. There is complete lack of confidence of being protected in the market. On the other hand, you have that National Spot Exchange (NSEL) fears. At the end of it all there is a simple way if you compare 5400 levels on the Nifty, last time it was 5400, previously it was 5400, the fact is that more and more blood is being seen in the portfolios of investors.
It is a bit sad that the Nifty is at 5400, because 80-85 percent of the stocks are quoting around 4000 levels of the Nifty. In this situation where we do not know where the rupee will go, that has become a major headwind. The macros are weakening every passing day. You have the sword having of the stimulus withdrawal coming next month possible. So in this scenario there are stocks that you may like, Tata Motors I continue to like.
I like stocks like Motherson Sumi, Lovable Lingerie, Biocon, wonderful numbers, good business, no problems in the balance sheet, no question of promoters pledging their shares. In this scenario if you recommend any stock to your client, the client asks you why should I be in a hurry to buy the stocks when I myself do not know as to where the markets are heading.
When you yourself do not know where the markets are heading, when nobody has an answer to that, so why be in a hurry when we can possibly earn a 10 percent somewhere in a decent fixed deposit. Unfortunately, these questions do not have any answers because while there are individual stocks to be bought into, there is absolutely no interest right now from retail investors or high networth individuals (HNI). Q: How are you approaching Bharti Airtel? Almost 60-70 percent of its total debt is dollar denominated, so it gets impacted quite a bit, but it was a performer for a while.
A: On the whole, people have stared to term this particular sector people as a little bit of a defensive bet right now. Amongst them, Bharti is the least preferred because of the debt in the books. Idea Cellular despite the fact that it is ruling at 52-week high now turns out to be possibly the best bet among defensive right now, because we have turned off pharma completely.
We have become negative on pharma. IT looks expensive. Fast moving consumer goods (FMCG) stocks could possibly come down. So telecom becomes a decent bet, but Bharti is definitely not one of the preferred picks in this sector. Q: What do you think have more downside from here - frontline FMCG stocks or frontline banking stocks?
A: Whenever bear market comes to an end, it is the stocks that have possibly withstood the complete downside in the market that possibly start giving way. So if one looks at the way Lupin has given off, Sun Pharma has given off, ITC is coming off, Hindustan Unilever (HUL) is coming off, Housing Development Finance Corporation (HDFC) and HDFC Bank has come off it is distinctly possible that we could see some more value being lost as far as the solid defensive names are concerned. So, this could be the last down leg of the market. How much further can it go is a very difficult call.
FMCG and pharma could possibly lose some more ground to sectors that have possibly protected investors to a certain extent in the carnage that we have seen across most of the sectors.