Rahul Singh, CIO-equities at Tata Mutual Fund, spoke to CNBC-TV18 about the market fundamentals and his sectoral preferences.
On Tata Mutual Fund’s smallcap fund, Singh said, “Market there is quite ripe because if you recall the correction there, it started much earlier than the correction in the rest of the broader market, whether it was the largecap indices or the quality midcaps. So there the market is quite ripe for stock picking right now.”
“In terms of valuations and some of the ideas which we are looking at, they look quite promising especially given that the valuations corrected and the fundamentals did not suffer as much as the valuations have suffered. So very bullish on that front per se if you take a one to two year view,” he added.
On his sectoral preferences, Singh said, “Corporate banks are looking good, not only because the corporate stressed pool is looking like it is peaked and it is going to come off, there will be lower credit cost below the net interest income level. However, what has happened over the last one month is that the pricing power for the wholesale banks has gone up given what has happened in the NBFC domain. So not only will you see the credit cost coming down going forward, but also you would see some kind of a lift or some kind of a cushion which the companies will enjoy in their net interest margins at the NIM level. So you will have a double benefit, first at the net interest margin level and then the lower credit cost. I think they are due for a very good 2019. So that is a large segment of the market which we are bullish on.”
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