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Indian market getting expensive, various stocks entering into bubble territory: DSP Investment Managers

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“It makes sense to move some bit of your money from specialty chemicals to agro-chemicals,” said Vinit Sambre, Head-Equities, DSP Investment Managers, in an interview to CNBC-TV18. He also mentioned that Indian market is getting expensive, as a result of which, pockets of bubble territories are getting created for various stocks.

“Market is expensive in the current state, there are lot of pockets where there is a bubble territory which is getting created,” said Vinit Sambre, Head-Equities, DSP Investment Managers, in an interview with CNBC-TV18.
According to him, there are a few sectors where there is value looking at the broader expansion taking place in the economy.
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“We saw HDFC Bank announce their numbers. The growth seems to be climbing up gradually and that is one aspect which some of these banks will showcase going into the next three-four quarters. More importantly, the asset quality is getting under control, recoveries are improving, collection efficiencies are improving, there is a certain amount of risk which is associated with the restructuring but I would say that over the next two-three quarters, as we see the benefit of the economic expansion percolate down to various categories, those risks will cool off. Within the banking sector, there are very high-quality midcap banks which have underperformed and are trading at reasonable valuations,” he shared.
There are a lot of agriculture companies, which are also trading at reasonable valuations today, he noted.
“It makes sense to move some bit of your money from specialty chemicals to agro-chemicals or to agricultural inputs as a sector. Largely, the sector has not participated and the stocks are trading at reasonable valuations. One of the reasons the stocks have not participated in the rally is due to some amount of skepticism because of the the second wave of COVID-19, which was seen more in the rural and semi-urban areas. Also, the risk of monsoon not playing out to the expectation was very high. I would say that as we are seeing growth coming back, rural economy is also improving. The government is very supportive as far as the overall agriculture market is concerned,” he explained.
According to him, the visibility of growth in the IT sector is better.
“I would also imagine that because of the pandemic, there is acceleration in terms of adoption of automation, digitization which would benefit the IT sector, and the visibility of this sector’s growth for the next three-four years is becoming even stronger,” he said.
According to him, healthcare has remained one of the favored sectors.
For the full interview, watch the accompanying video.
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