The domestic auto sector is suffering from the crisis in NBFCs and the changes in insurance rules and the government needs to immediately fix these two issues, says stock market guru UR Bhat, director of Dalton Capital Advisors.
Speaking about the market from here on after the election result-related rally, Bhat said: “Today, it was what the market expectation was and therefore some celebration is probably called for. Tomorrow onwards, we will start looking at what is happening in the US-China trade war, the IT supremacy war, the Iran problem, and all these things will start affecting us. It is not as if the economy is in great shape and it is just going to be celebration all the way.”
“If the NBFC issue is fixed or at least PSU banks are re-capitalised so that they they can step into the shoe of NBFCs, the auto sector problem is solved. That problem is not so much about demand, it is about the price point and availability of credit,” he said.
Talking about IT and pharma space, he said, “Pharma is facing some sort of a structural problem. It will take some time for them to adjust to it, so ignore that sector. I don’t think it is a great time to invest in pharma. As far as IT is concerned, the new government has a big issue to handle especially because of the battle between US and China over IT supremacy. There is a window of opportunity for IT companies because China is not seen as a great provider of IT services or products to US or Europe . Indian IT majors really can step into that space.”