UR Bhat, director at Dalton Cap Advisors, shared his views on the fundamentals of the market and specific stocks.
Bhat expects the market to be range-bound with a negative bias. “There is no good news coming from anywhere. On the trade front, between the US and China, the temperature seems to be going up."
“On the domestic front, there are indications that things will happen, but something needs to be announced and implemented whether it is on the taxation front or on giving a fillip to the industry. All these things are yet to be seen; I think the noises are right, but I think till that happens the market will be circumspect,” Bhat said.
On the Q1FY20 earnings, Bhat said, “Not exactly encouraging. I think a couple of results have been good, but most of them have been lacklustre. Therefore, a turnaround in earnings growth is nowhere in sight. Given the sort of earnings growth, the valuations do look slightly stretched even at these levels.”
Bhat is positive on the private sector banks. “If you have to be in equities, then I think some of the private sector banks still present reasonably good investment prospects largely because of their gain in market share. I think that process is continuing and the repair of the PSU banking sector has not been fast. The sort of money that they are talking about in terms of investing recapitalization, that is not enough to cover years of loss. Therefore, there is no growth capital coming into the PSU banking sector. Therefore, there is huge scope for private sector banks to gain market share and that seems to be the only place where one can invest.”
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