Monday Market

Large IT companies are priced to perfection

The worst is not over for all NBFC stocks and it’s the time when men will be separated from boys. RBI has ensured that liquidity remains comfortable at the system level, while SBI has expressed its intention to increase loan portfolio purchases from them, said VK Sharma, head (PCG & capital markets strategy), HDFC Securities, in an interview with Ravi Ranjan Prasad. PSBs that are facing difficulties in maintaining required capital level will be cautious while helping NBFCs, Sharma said. Excerpts:

Banks have reached NPA cyclical peak; corporate credit offset to accelerate

Steep hike in crude oil prices and alarming depreciation of the rupee are two key concerns for the market at this point in time. With currency being highly volatile, market sentiments are also getting adversely impacted. The increased market volatility in the recent months, thanks to global and domestic factors, has resulted in moderating of mutual fund flows. Shift of household savings from non-financial assets to financial assets and within financial assets, increased allocation to direct equities and mutual funds (versus bank fixed deposits traditionally) is a structural story.

Current market correction doesn’t look abnormal

The linkage between elections and inflation has been tenuous. No government likes to enter an election phase with high levels of inflation. Though inflation is broadly under control and within RBI’s comfort zone, inflationary expectations have started inching up due to rise in fuel prices and recent rupee depreciation, said Mihir Vora, director and chief investment officer, Max Life Insurance, in an interview with Falaknaaz Syed. Excerpts:

What kind of Q2 earnings you expect?

IT, pharma set to do well in next few months

India’s trade deficit narrowed to $17.4 billion in August from a 5-year high of $18.02 billion in July, helped by a pickup in expo­rts after a fall in the rupee, said Rajiv Ranjan Singh, CEO of Karvy Stock Broking, in an interview with Sangeetha G. We are witnessing currency depreciation in most emerging econo­mi­es, out of which a part of can be attributed to the ongoing trade tussle, he said. Excerpts:

What has been the market reaction to imposition of fresh tariffs by the US on China?

Realising target of disinvestment could be an uphill task for govt

The pace of recovery in the Indian economy from the twin shock of demonetisation and implementation of GST has been quite encouraging. Quite a few high frequency data-points like air traffic, consumption of diesel, auto sales, consumer product sales and job listing on recruitment websites suggest fairly optimistic economic growth outlook, said Gaurav Dua, head of research, Sharekhan, in an interview with Rajiv Ranjan Prasad. We expect GDP growth of around 7.4-7.5 per cent for FY19 and the low probability of fiscal slippages, he added. Excerpts:

Continued correction in market could reverse ex-SIP flows

Indian benchmark indices like the Sensex and the Nifty were the best performing indices globally this calendar year, but a weakening rupee and rising bond yields could upset the Indian equities apple cart. The local market may get into the correction mode as the domestic liquidity is getting squeezed, which have been sustaining the market so far.

RBI may increase repo rate by 25bps in October to contain inflationary pressures

It’s tough to say now whether the US-China tariff conflict will turn into a full-scale trade war or it’s just a means to negotiate more balanced trade. Will get to know in next few months how things shape up. India though directly not impacted will still have a contagion effect, said Jinesh Gopani, head of equities at Axis Asset Management Company, in an interview with Falaknaaz Syed. If oil rises to $80 a barrel and the rupee depreciates further, the market could go for a correction or go sideways, he added. Excerpts:

Govt appears committed to fiscal discipline, consolidation

The rupee has hit life-time low recently, but it is still relatively better placed than during the US Federal Reserve taper tantrum of 2013, and has fared better than some of the other fragile emerging market currencies year-to-date in 2018, said Sampath Reddy, chief investment officer, Bajaj Allianz Life Insurance, in an interview with Sangeetha G.  However, weaker rupee and inflation can emerge as macro-headwinds for the market, he added. Excerpts:

Asset quality concerns at PSBs seem to be fading away

The recent correction in mid- and smallcap has to be viewed in conjunction with the significant return (BSE midcap and BSE smallcap index with around 250 per cent return since September 2013 till December 2017). Such minor corrections after significant rally are normal and in fact desirable, said Pankaj Pandey, head of research, ICICIdirect, in an interview with Ravi Ranjan Prasad. In terms of MF flows, we don’t expect these structural SIP flows to slow substantially, he added. Excerpts:

AIFs work well only for HNIs, not designed for mid-income people

The disposal income of the middle-income group is on the rise. A significant part of that incremental savings is expected to flow into AMCs and insurance. Thus, the market looks quite promising for the mutual fund industry, at least for the next five years, said Sumit Bilgaiyan, co-founder and director of Equity99, an equity research and investment advisory firm, in an interview with Ritwik Mukherjee.

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