Manishi Raychaudhuri, Asian-Equity Strategist, Equity Cash Asia Pacific at BNP Paribas, believes that the recent 6-7 percent fall in markets has led to a sharper decline in some of the stocks and sectors. According to him, it’s the need of the hour to be cautious with respect to sectors. He is of the opinion that those stocks that corrected the most during this phase might begin to look attractive. However, despite the correction, his overweight stance on India remains unchanged.
In an interview with CNBC-TV18, he said, “It's really selective at this point of time. I think the sectors and stocks that have corrected a lot more during this correction phase, they are possibly beginning to look attractive. We are not making any changes to our India stance in the Asian model portfolio. We had an overweight stance prior to the correction, we are retaining that stance even though we have made some changes recently to the market outside India.”
“In the near-term, this volatility that we are seeing might continue for some more time but longer-term, positive stance on India on account of recovering consumption, low penetration of consumer goods, financial services, the usual things that come to mind- those themes are very much intact and will continue to support the financial markets in the foreseeable time horizon.”
On oil and gas space, Raychaudhuri said, “It is a space that does attract us. We did increase exposure to the oil and gas side, both through the pure play oil explorers and through the conglomerates.”
On telecom rate hikes, he said, “This doesn't come as a surprise to us at all. We have been talking about this consolidation leading to increased pricing power in the telecom services sector, and this has just been playing out. So that 20 percent tariff hike announced by the industry major is no surprise to us. We have a significant exposure to the telecom services sector in our portfolio, both through the pure plays and through the conglomerates and I think it is not the time to step out of that position right now. We do have a significant exposure to the space and we will continue with it for now.”
On banks, Raychaudhuri said, “The near-term lacklustre performance over the past one month or so simply pertains to the FIIs holding patterns. The foreign institutions and even the large domestic institutions- they have significant holdings in the private sector banks and of late in the PSU banks as well. So when the valuations tend to get stretched and the foreign institutions in particular, when they see the need to lighten up their positions, they tend to sell what they can. They tend to sell what they own in large measure.”
“I think that phenomenon of over-ownership, which I may use, for lack of a better phrase, is possibly responsible for this near-term underperformance of the sector that we have seen,” Raychaudhuri mentioned.
He added, “At the same time, when one looks at the medium-term over the next maybe two or three quarters or even a slightly longer timeframe, we do expect two things- one, we do expect a pickup in credit growth on account of both investment cycle picking up and consumption remaining steady. Second, we do expect the concerns about non-performing loans to peter down even further. We do have a significant presence in the financial sector, spread across private sector banks, some small degree in public sector banks, and also insurance and NBFCs.”
For full interview, watch accompanying video.