Instead of looking at the Nifty level and getting too excited or worried about valuations, the focus should be on different types of stocks and sectors within Nifty and largecaps which are doing well, said Rahul Singh, CIO-Equities at Tata Mutual Fund, in an interview with CNBC-TV18.
He added that telecom sector in a better shape with talk of tariff hikes over the last few days after Bharti Airtel and Vodafone Idea reported record losses in the second quarter.
On telecom stocks, he said: “While the immediate reaction maybe a little bit on the higher side but I do not see that being a hindrance for it to become a longer term holding from hereon in the portfolios."
On banking stocks, Singh said: “We are bullish on the corporate banks in general and within that there are banks within public sector undertaking (PSU) which are doing better job of managing their growth even while the NPA [non-performing asset] cycle is following the same trend in terms reducing NPLs [non-performing loans] and credit cost.”
Auto sector has bore the brunt of the economic slowdown in the country with most manufacturers reporting declining sales through the course of the year.
On the auto sector, Singh said: “We would prefer cars within the auto space as a segment where the inventory correction has been much more and therefore the pick-up could come in immediately.
“Commercial vehicles (CVs) are going to depend on economic recovery and it could take some time. So that’s how we will divide the auto space instead of looking at it as one homogeneous sector. We prefer to go stock specific and look at stock specific triggers and also any segment specific things which are happening from a tactical perspective,” added Singh.
The Union government has been big on its plans to divest state-owned companies. On Tuesday, the Centre gave ‘in-principle’ approval for strategic disinvestment of 28 central public sector enterprises (CPSEs) including National Project construction corporation, Hindustan Petroleum Corporation Limited, Rural Electrification Corporation Limited and Cement Corporation of India.
On divestment front, Singh said: “3-4 months back nobody was talking about strategic divestment. So it’s a huge change in the mindset of the government that they also want to divest through a strategic route rather than just doing the divestment route.
“It’s probably just the beginning of this process where the government is testing waters in terms of privatizing some of the large names, but there could be more to come in terms of monetizing surplus assets within PSUs or government entities. So it could take various shapes and I think we need to watch this space because once this segment starts to do little better than what it has done in the last 7-8 years. There is going to be an alpha creation from this segment for the portfolios.”