What is you reading of the market texture during the week gone by?
During the week, we saw quite a few sectoral switches. The rally in metals cooled down and it seemed that the market is now looking back at value stocks once again. Probably, some big guys or funds are taking shelter in PSU banks. Funds are also shifting allocations to defensives. Pharma stocks remain the flavour (of the season). It seems that the downside for the market remains limited in the near term and the upside is also capped.
What is your outlook on the pharma basket?
Vaccination ensures that there will be some kind of demand for pharma companies. Cadila moved up sharply after the announcement of a new drug. We have also seen a good run up in Wockhardt Ltd. Pharma will remain in favour till the next quarter at least. I do not foresee any kind of aggressive selling in this sector. It should be a resilient one from here, but the upside will hardly be 5-7 per cent from here.
Within the financials sector, would you stick to the marquee largecap names or do you also like some PSU banks?
Large private sector banks like HDFC Bank or Kotak Mahindra Bank have delivered good numbers. The asset quality is improving in Axis Bank and ICICI Bank. So private sector banks have got some more steam left. As an investment, this is one pocket where one can look at over the next 2-3 years, but in the short-term lockdowns are impacting their business.
Where do you smell an opportunity in the midcap space?
There are quite a few opportunities like KPIT Technologies, Birlasoft and Mastek in the midcap IT space. They are adding new clients in their own verticals. In the midcap segment, I would prefer IT companies as the growth prospects look good for the next 1-2 years.
Among largecaps, I would wait for L&T numbers. I would also look forward to FMCG stocks like Britannia, HUL and ITC for this week.
