Stocks to Buy Today: IT and Pharmaceuticals May Outperform in Next 2-3 Months: Sandip Sabharwal
How do you see RBI politics?
I guess the RBI and MPC are likely to maintain the status quo. If that second wave of Covid hadn’t been here, I would have thought the accommodating stance would have given way to a neutral stance. But given the unfolding of the second wave of Covid and the renewed confinements, it is impossible for them to change their position. I therefore assume that the position will remain accommodative. There will be no change in the rates. This will be a policy where not much happens and if the wave of Covid eases over the next couple of months, we may see a shift in stance at the next meeting.
Where does that leave us in the metals rally?
The strong rewards of ramp-up risk for short-term investors are not favorable. I guess these stocks would continue to stay in a bearish buy mode. Unlike some sectors like automotive, two-wheelers etc. where the overall short-term scenario has changed and they remain on the rise, metals remain low as the trend is still on the rise as the simple rising metal prices still may not be fully reflected in stock prices. They can become speculative favorites for a while when they run too much, but now is not the time to buy because
corrected from 10 to 15% before increasing by 20%. So people have to wait for such corrections to enter these stocks.
What explains the collapse of all financial stocks yesterday?
In my opinion, most of these banks, especially the private funders and retail oriented financial institutions, are billed for perfection. They are not ready for unpleasant surprises. But two negative surprises had arisen – renewed lockdowns that will certainly impact the quality of the retail loan portfolio and that were not taken into account because people thought we weren’t going to see a further deterioration in the market. the quality of assets. Second, the growth metrics in terms of advancements turned out to be a little lower than people expected.
At a time when consumers expected mortgage loans to be sustainable loans, the rise was very aggressive. But loan growth has been moderate. Both of these factors impact finances and some of the heavily over-owned retail-focused names like HDFC Bank or remain overvalued in the short term, given the growth paradigm as well as the outlook for asset quality. These could be corrected before entering the buy zone.
Thus, NBFCs that have provided unsecured loans in this type of environment are likely to underperform. But the experience of the last year has taught us that just because there is an unsecured loan does not mean that the capacity of the consumer or the capacity of the borrower will decrease. Do you think that the sentimental impact somewhere is much more than the logical impact in NBFCs and even in private banks?
No, I do not think so. We didn’t expect something like this to happen again and then we had this. The markets were therefore taken by surprise. There was only positivity built in and to that extent small negatives can impact valuation as those stocks were priced perfectly. Small negatives can lead to big corrections and that is what is happening now. I believe these stocks are extremely owned.
When we reach such scenarios, then for these stocks to give positive returns, a positive surprise is needed and it might not come to pass. Last year, things were expected to turn out badly, but the recovery came very quickly. Monetary policy was accommodative and there was no fear of inflation, but some of those fears are a reality. We also have to take all of these things into account. I guess, from a value and time perspective, these stocks need to undergo a decent correction.
Given that the turn is global, whether it’s US growth or unemployment data, are we likely to see a repeat of what we saw earlier last year when IT and has the pharmacy started to outperform? Even for FMCG, will there be minimal impact?
Last year’s base will be very high, so some companies may not provide the kind of numbers expected. But I agree with IT and pharma. We could see an outperformance of these two sectors. We need to see the margin outlook because the rupee has been very strong and we need to watch the impact this has on results. Overall, given that the shift is global, global sectors could outperform over the next two to three months and because in these economies the growth pick-up is going to happen faster and companies that cater to these markets will outperform.