 "AK Prabhakar, IDBI Capital")
In conversation with Indrani Mazumdar, AK Prabhakar, Head of Research, IDBI Capital shares his view on market in view of fourth quarter earnings. He also shares sectoral outlook and top bets from a near to medium term perspective. Edited excerpts:
What your take on the equity markets giving the recent run-up seen over the last few weeks? Which are some of the sectors that one can avoid as of now?
The recent rally in the equity markets was a just a pull back and the uptrend is unlikely to continue as post the RBI policy review correction could set in. My advice would be to avoid pharma, FMCG, metals and PSU banks ahead of Q4 result season.
What is your outlook on broader markets? What are your favorite picks from the midcap space?
The outlook for the broader market from a 1-2months perspective is negative. We can soon retest 6,800 lows seen in month of February. In the mid-cap space, we like Ramco Cements, Supreme Industries, Nilkamal, Mahindra Holidays Resorts India and Welspun India.
From the financial space, what would you prefer between private or state-owned banks? Would you recommend buying into NBFCs?
In the financial space, I would prefer private banks over state-owned banks. Some of the names I like from the private banking space are HDFC Bank, YES Bank and IndusInd Bank. Meanwhile, among the NBFC segment, M&M Finance and Shriram Transport Finance look attractive.
What is your call on the metal space in the wake of rebound in global metal prices?
I believe the rally in metal prices has been sharp but I feel it is not sustainable as demand has not improved. Hence, I would suggest that one should use the rally in these metal stocks to reduce positions.
The market will start reacting to the Q4 results from April. Which are some of the sectors which are likely to positively/negatively surprise you?
According to me, the Q4 result season will be tepid. However, having said that I believe the IT pack, Private banks and refiners will post good results while PSU Banks, metals, capital goods can throw negative surprise.
March has seen sizable Foreign Institutional Investors (FIIs) inflows amid favorable global cues. Do you see the pace of inflows to continue?
Yes, March has witnessed a significant amount of capital infusion into equities. However, few Fed governors have been hinting on a Fed interest rate hike which is more data dependant but if any fear of interest rate hike troubles market then the dollar would strengthen which will in turn reverse the flows.
What are some of the global events that one should closely watch that could adversely impact our markets?
Some of the prominent global events that one should closely monitor are rate hike by US Federal Reserve, US election, Britain Exit from Euro zone and cross currency volatility.
