Your take on mid and small-cap stocks after Sebi's latest rule on multi-cap funds.
We were of the belief that small and midcaps will perform as valuations beyond the top 15 stocks are quite attractive and the underperformance of small and mid-caps which started in early 2018 was coming to an end. The Securities and Exchange Board of India's (Sebi) ruling is acting as a catalyst for the performance of the small and mid-cap stocks.
Is it still a good time to enter information technology (IT) stocks?
were expected to re-rate and that is happening now. The guidance of IT companies has been quite encouraging. So, from a perspective of steady returns, IT stocks
are a good bet to enter even at the current levels.
The pharmaceutical sector is in a structural uptrend and that trend could sustain over the medium term. The sector is likely to see an improvement in return ratios from here and stocks like Dr. Reddy’s, and Biocon will continue to deliver good returns.
Your view on RIL. It has played a significant role in lifting the benchmark index. Is it still a buy?
is into a completely different zone with fundraising and foreign listing plans of its subsidiaries. The bulk of the returns have already come. Returns from current levels will depend on triggers like the listing of Jio or retail business.
Your expectations from September quarter earnings.
September quarter earnings will be very important as the impact on the banking, financial services, and insurance (BFSI) sector will be one of the critical factors. Overall, a decline in earnings is likely but business recovery management commentary will hold the key.
What are the sectors/stocks you are bullish and bearish on and why?
Our key positive sectors are IT, Pharmaceuticals, Staples, Chemicals, Agri, and Automobiles where we expect recovery and traction of recovery to play a key role. We are underweight on industrials and infrastructure where recovery seems elusive.
One sector/theme that can emerge as a dark horse this year.
Cement can still be a dark horse as the sector earnings depend on pricing actions than just volume recovery. Historically, the sector has demonstrated good pricing discipline. Thus, if pricing sustains, the sector could still deliver good returns.
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