Sensex scaled a new peak on Thursday crossing the earlier high of 40,312 that it hit on June 4. Saurabh Mukherjea, founder of Marcellus Investment Managers in an interview with CNBC-TV18, however, said that economic revival in the country is still some time away.
“We have a slow economy, we will have weak earnings yet again this fiscal but the market has ignored weak earnings this year and focused on the liberalisation process, the reform process which is underway and until the market has faith in that, we will continue rallying,” said Mukherjea.
Talking about economic reforms, he said: “The reform process has only started two months ago. So let us see how the reforms pan out and until the economy actually starts reviving it will be difficult for anyone to say that we will see a broad-based stock market rally.”
He added: “The economy reviving, I do not think is going to happen this year. It’s a next fiscal story and until the next fiscal it is difficult to see a broad-based stock market rally. We are going to carry on rallying in the current fashion which is up to index benchmarks as the market tries to discount economic reform,” he added.
On auto stocks, Mukherjea said, “We have begun a little bit of position building in some of our portfolios in auto stocks. We have done that position building in one of the two-wheeler companies. I am not at liberty to disclose the name of that two-wheeler company.”
He continued: “The reason we do not buy auto consistently in the manner that we buy Asia Paints and HDFC Bank is because auto is a cyclical sector; it has six good years and four bad years and does create a degree of volatility in our portfolio which we do not like and that being said the reason we started position building in autos 3-4 weeks ago was given the quality of our two-wheeler franchises the valuation looks incredibly juicy and hence we bought a bit of two-wheelers in some of our clients’ portfolios,” added Mukherjea.