Waarom Prasanth Prabhakaran deze 3 sectoren vermijdtnovember 25, 2019
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We believe a broad-based rally in the midcaps and smallcaps is a long way off.
Nov 21, 2019, 05.21 PM IST
Do you think that some of the US FDA concerns are confined to select pharma stocks and that we can see a recovery in earnings? Where are you placing your bets?
From our side, pharma still remains an avoid sector. There are a few sectors that clearly remains avoid in the near future. One of them is pharma. Apart from that auto, consumption also remain avoids.
In case of pharma, the problem remains that the US FDA regulations have been an overhang on this industry apart from a margin pressure expansion. The only buy that we have had in the sector which has already run up to a 52-week high is Ipca Labs. Apart from that, it is an avoid in the entire sector. We are only bullish on the India facing story as far as pharma industry is concerned.
Within the financials though have you been noticing the shift to some PSU names? Are you looking at some new opportunities in the financial basket with regards to banks, particularly corporate banks and including PSUs?
The only bank that remains our focus has been a largecap one. We believe that a broad-based rally in the midcaps and smallcaps is a long way off. The only stock that we have in our largecaps. One of the major contributors in this is
. Clearly they have been ahead of the curve. They have gone through the pain process at least a couple of years back and they are on the right path as far as the growth path is concerned.
ICICI has a very strong liability franchise. They have made provisions well excess of what was required and in case the writebacks happen in the way the news has come in, they will be among the largest beneficiaries that is going to be there.
Apart from that, if you take the stock price and combine it with the subsidiaries which make it sum of parts, you should have a much better valuation as far as ICICI Bank is concerned. That remains a key stock in the portfolio.
How have we looked at some of the steps taken up by the government? These could have a ripple effect on a lot of banks that have significant exposure to the telecom space, DHFL etc?
There was a bottoming up effect of the NPA cycle that had happened a year or so back. Unfortunately, the NBFC crisis precipitated it to a new level of problem that was there. The present thought was that DHFL will be able to get out of this mess but unfortunately that does not seem to be playing out. So the risk appetite needs to come in from the banking space to kick-start the economy will again take some time.
In the current environment, it is not the right news. It will take a little bit of time before the risk appetite returns for the lending cycle to start again. The NBFC space again is also a highly critical space as far as SME and MSME lending space is concerned. If they are not able to raise money which had become slightly better in the last quarter or so, we will continue seeing problems as far as the economic pickup is concerned.
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