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As Nifty50 races to 18,000, Edelweiss cautious on domestic discretionary demand

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As Nifty50 races to 18,000, Edelweiss cautious on domestic discretionary demand

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On safe sector bets, Narain said he would position himself on the IT and banking sectors. He believes that the consolidation trend in the real estate space has been on for a reasonable length of time

The Indian equity market is trading at a record high with the benchmark Sensex crossing the 60000-mark for the first time and Nifty nearing the 18,000 level.

Aditya Narain, head of research-institutional equities at Edelweiss Securities said he would be watchful of the domestic discretionary demand space.
Speaking to CNBC-TV18, Narain said that the expectations from this sector were high due to the Diwali season which needs to be eyed.
“From an economic cycle perspective, distinctly and a little less from a stock price cycle, it would be in the domestic discretionary demand space. I would be watchful, I think in the Diwali season, there are a lot of expectations and that's what you got to watch carefully,” Narain said.
“Therefore, the bottomline is that the risks would lie a little bit more on the consumer discretionary space and potentially a little bit in the capex support spaces like cement possibly, where prices have gone up, stocks have done well and you are not tending to see the kind of demand at this juncture, as the prices seem to suggest,” he said.
On safe sector bets, Narain said he would position himself on the IT and banking sectors.
"We have been very aggressive in IT space for the last 18 months and it’s a place where we have a lot of comforts, both in terms of demand outlook, the ability of Indian companies to get that demand and relatively limited risks from a stock price perspective. The other, where we are relatively overweight and a little bit aggressive, is the banking space,” he said.
Further, he believes that the consolidation trend in the real estate space has been on for a reasonable length of time
"You might start seeing the early signs of price. So, to some extent, this is a shift that's going to happen, but whether one would follow through to the stock performances seen over the last couple of days, I would wait off a bit on that. But directionally, you are in the right space. The risks would lie in terms of the market over extrapolating the pace of this demand or the price that people might be factoring in,” he said.
For the entire interview, watch the video.
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