Budget 2013: 'Invest in pharma, financial, IT sector'
Within the IT industry, there are select companies which have done extremely well in the last quarter.
While most people in the market are bullish in the run up to the Union Budget, Dipan Mehta, member of BSE & NSE doesn't see the Budget having any large impact on the equity market. The domestic and global cues, according to Mehta, will at best have a short-term effect on the stock prices.
Mehta advises investors to wait before taking any step in terms of portfolio change. "Investors should wait on the sidelines and let these events play out. There would be a lot of volatility, markets may go up, go down and lot of noise also may come through but post these events, when the market settles down, it may be a good idea to reassess and see which stocks are available at attractive levels," he adds.
On what sectors he is bullish on, Mehta says, with the interest rates drifting lower, the financials sector - banks and the non banking finance companies - will be the biggest beneficiaries. He is also overweight on pharmaceuticals and IT sector.
Below is the edited transcript of Mehta's interview to CNBC-TV18.
Q: It is a crucial week for the market given that we have the Budget, the economic survey and the Railway Budget. Even in terms of global cues, March 1 is the deadline for the sequester across the US markets. How should an investor approach next week?
A: It is best to just wait and watch. Let the events actually play out and then reassess and see what levels the markets are at and then take a call. If there is a correction of two-three per cent from these levels or so, then investors should take that opportunity to increase exposure to equities. By and large, the events which we are talking about the next week will have at best a short-term effect on stock prices and on the economy as a whole. Long-term, the important trends to look out for are lower inflation, lower interest rates, gradual improvement in the gross domestic product (GDP) growth rates and improvement in corporate profits.
I don't think the Budget per se or any of the events would do great damage to those particular trends. Investors should wait on the sidelines and let these events play out. There would be a lot of volatility, markets may go up, go down and lot of noise also may come through but post these events, when the market settles down, it may be a good idea to reassess and see which stocks are available at attractive levels.
Q: As an investor, is there anything that would attract your eye in this forthcoming week? Like a sectoral call or stock call?
A: Nothing specifically for the week per se in terms of a trading pick, but I think that broadly we are convinced that interest rates will drift lower and at the same time, one would see an improvement in the overall economic growth. The biggest beneficiaries of this trend have to be the financials- that is, the banks and the non banking finance companies. Our focus and overweight position is there in that particular sector.
At the same time, this trade deficit continues to remain a worry. The chance that the rupee could depreciate from these levels as well means the focus will come back on to the export oriented businesses. We are overweight on the large pharma companies which have good exposure to generics market globally.
Within the IT industry, there are select companies which have done extremely well in the last quarter and they have a differential business model that could be studied and investors could look at acquiring those stocks. Broadly, these are the three large baskets where investors could focus on and 90 per cent of the equity could easily be allocated to these three particular industries.
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