Harsha Upadhyaya, Head of Equities at Kotak Mutual Fund told CNBC-TV18, "We are currently overweight on IT, telecom and auto stocks. The way we are approaching the markets today is among the defensive sectors i.e. IT, fast moving consumer goods (FMCG) and pharmaceuticals, we believe that in terms of valuations as well as earnings growth, IT is better placed than the rest of the two."
He further added, "Similarly if you want to look at the cyclical names, auto comes first because in case of a cyclical recovery, it will be one of the first sectors to recover. The operating leverage is very high in auto companies and also some of the auto companies can be hedged in case there is some scare around the currency as and when QE taper is announced. So all in all there is a balance between defensive sectors and cyclical sectors."
"At the same time we are underweight on sectors, which are closely linked to investment cycle and capital expenditure. We believe over the next six-eight months, there is unlikely to be a large upside in terms of any new projects or any new capital expenditure plans either from private sector or from public sectors. So to that extent, anything related to that we are still underweight," Upadhyaya said.
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