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Rupee depreciation an incentive to withdraw money; overlook negatives in autos: Manish Sonthalia

market | Dec 17, 2021 12:35 PM IST

Rupee depreciation an incentive to withdraw money; overlook negatives in autos: Manish Sonthalia

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Manish Sonathalia of Motilal Oswal Asset Mgmt said rupee depreciation is an incentive to withdraw money from the market. The rupee has been depreciating for the past seven sessions as the US dollar strengthened. Sonthalia is also positive on auto space, IT stocks, and cement companies.

The rupee declined to 76.23, by 14 paise against the US dollar in the opening trade Friday reversing the recovery it made Thursday, as persistent foreign fund outflows and muted domestic equities weighed on the greenback. FIIs were the net sellers in the market Thursday, offloading about Rs 1,468 crores, per exchange data.

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On Thursday, the greenback had clocked its first gain in seven sessions. It has rebounded 23 paise to close at 76.09. If the currency, however, depreciates further, there will be more incentive to withdraw the money, Manish Sonthalia of Motilal Oswal Asset Mgmt said. In an interview with CNBC-TV18, he said: “Markets are a buy on dips. How much the dip is going to be is a big call that one needs to take in the short term. The dip is a function of the rupee primarily and the rupee looks quite vulnerable at this point in time. We have seen FIIs pull out money big time and obviously if the rupee depreciates further, there will be more incentive to pull out money.”
Sonthalia’s picks
Autos: The market might want to overlook negatives in the auto space. “Its demand outlook is strong and valuations are attractive for auto companies,” he said.
IT: The story is good for the entire IT sector, he said, adding that he prefers TCS among the large caps in the IT sector.
Cement: The cement companies do not have demand issues, it has picked up after Diwali, Sonthalia said. “I am particularly very optimistic on the demand side, I really think that demand is exploding. There could be blips on a quarterly basis when compared on a year-on-year (YoY) basis, but the entire economy is buzzing. The only risk is that if we overheat and benign liquidity that we have seen over the last 18 months gets withdrawn; it’s getting withdrawn, but if it gets withdrawn in a hurry then there may be challenges, but otherwise, there is no problem with the demand side,” he said.
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