Devang Mehta, head of equity advisory at Centrum Wealth Management, shared his views on the fundamentals of the market.
On the auto sector, Mehta said, “Post-election numbers sentiment, as well as liquidity, has taken a front seat. Probably the flows would now start coming into businesses which are high ticket consumption businesses. Of course, car sales and bike sales are a factor of a lot of confidence building measures or stimulus which probably the market expects from the government in the next few months to come.”
“My sense is if somebody has at least a 1.5-2 year horizon, this is a sector one should get into; two-wheelers, four-wheelers, tractors, agribusinesses, all this probably once the consumption starts an uptrend, I think this is where the money will still be made into. So we are bullish on both discretionary and non-discretionary consumption and auto is one sector which one should buy on every dip,” said Mehta.
On the aviation sector, he said, “With crude coming down again, it is a big tailwind for the sector. As a sector as a whole, it has seen more a consumption related type of behaviour rather than the behavior which was considered to be a privilege of only a few. So, in India, if you count it as a consumption-oriented sector, yes, it fits the bill. Probably on a tactical side, one can buy it for a 3-6 month horizon where things look a little better.”
"ITC is a hold at current prices. ITC is always a soft target. Whenever there is fiscal deficit issue or whenever the government wants to raise finances or its wants more taxes, ITC always will be under that overhang. There are a lot of good businesses in this area which is better placed than ITC where consumer demand will come back and that would have sweeter times for those type of companies,” Mehta said.
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