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    We have a Nifty target of 11,700 by end of this year: Aditya Narain, Edelweiss Securities

    Synopsis

    Our overweights include IT, consumer staples, large corporate banks and selectively pharma, says Narain.

    Aditya Narain, Edelweiss Securities1200
    The market is likely to be higher at the end of the calendar year 2019 from current levels though first half of the year is likely to be weak owing to uncertainty ahead of the general election, said Aditya Narain, head of research, institutional equities, Edelweiss Securities.

    In an interview with Sanam Mirchandani ahead of the Edelweiss India conference, Narain said he is bullish on IT, consumer staples, large corporate banks and selectively, on pharmaceuticals.

    Edited excerpts:


    What is your interpretation of the interim budget and the RBI policy?

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    Even at this stage of the business cycle, where lot of work has been done in restructuring businesses, you require an impetus that comes externally to get the business cycle going. From our perspective, this has come at the right time. A lot of people think there will be inflation risks or the fiscal deficit could reach too high. We are of the view that inflation has structurally come down. So the ability to do this is much greater. The upside risk you run on getting the economy going and taxes coming is greater than the downside risk on inflation.

    Do you see more rate cuts?

    Our call is for 75 basis points. Now they have cut 25 bps. We think there will be at least another 50 basis points (cut).

    Do you see more downside risks to the market?

    The market at the end of 2019 should be higher. We have a Nifty target of 11,700 by December 2019. The first half of this year is going to be weak. There are risks to the market leading into the elections because there is uncertainty and we are seeing a little bit of a wobble on flows. The market is somewhat indifferent to the government that comes in. It should be able to ride the government cycle. You will see much more volatility with the fact that there is an election coming up. But the SIP number of ₹8,000 crore continues to be more or less the same. As long as that does not slow down materially, the structural amount of money coming into the system continues.

    Which sectors are you bullish on?

    We have a more defensive strategy. We are cautious going into the elections. Our overweights are a classically defensive portfolio; we are high on IT, consumer staples, large corporate banks and selectively on pharma. It is a defensive portfolio which has done very well in the past couple of months. For another couple of months, that is the portfolio to maintain.

    Do you think it is time to buy midcaps after the sharp correction?

    As of now, we still prefer large caps. But yes, midcaps are getting much more interesting. A lot of the froth has gone out. They are more reasonable in terms of valuations. I don't see immediate risk appetite for people to get into them very aggressively but I think the over-valuation you had with them, that's effectively gone out.

    The concept of environment, social and governance within investing community has not caught on as much in India. Do you see this picking up in the future?

    Compared to where global standards are, India is still lagging. We are beginning to see a belief system emerge within Indian businesses where they believe that this is the right thing to do. That will really shift the needle in terms of how much ESG consciousness is there in the Indian workspace. In India, there are a set of business opportunities which in themselves are very high on ESG. We have focus on six areas- affordable housing, financial inclusion, health, people services, digitalisation, and environment itself.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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