Shankar Sharma, chief global trading strategist, First Global, tells Ujjval Jauhari that though the Sensex looks stretched at the current level, but it doesn’t matter as an investor does not buy the index. Edited excerpts:
The markets have performed well on the back of foreign inflows. What have been the trigger for such huge inflows?
Foreign institutional investors (FIIs) have started realising that the Asian and Indian scenario will be much better than that of Europe and the US.
In true sense, people now see Indian markets unconnected with the global markets, unlike in 2008. They have started analysing different markets differently, based on their respective local fundamentals rather than global developments.
Do markets look stretched at the current levels in terms of valuations? What will be FIIs approach towards India compared to other Asian markets?
I think FIIs will continue to be bullish on India. Selectively, the valuations may look stretched, but there are stocks like Tata Motors that still trades at 10-11 times. The index may look stretched at 18-20 times, but one does not buy the index.
One should look at pockets of reasonable valuations like Tata Motors, Bajaj Auto and certain public sector banks that are reasonably priced.
What are your expectations from the upcoming results of India Inc? Any sectors that you see can outperform, or any that will underperform?
The first quarter of the current financial year was not very good. Select corporates did well like Tata Motors and Tata steel.
I cannot predict the numbers, but there won’t be major positives or negatives. Our favourites for the last 18 months have been autos, pharma, banking (especially public sector banks) and oil & gas.
