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Market recovery likely to be restricted to largecap stocks: Kunj Bansal

‘It will be more of BFSIs that will participate in the recovery’

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Last Updated: May 13, 2020, 01.00 PM IST
Kunj Bansal-1200
I do not think defensives like FMCG and pharma are going to participate.
Cement is something that could straightaway be taken as an immediate investment band, says Partner & CIO, Sarthi Group.

What according to you is going to recover fast? Is it going to be stronger hands like pharma, telecom getting stronger or do you think it will be more broad based across the board move that one will see?
If I take a short-term call on the market, as you said, today and tomorrow would be green. Of course you should wait and watch as one cannot predict that for the market but assuming that be the case, I do not think it will be a broad-based recovery. In my view, it will be a largecap-restricted recovery. Of course, some smallcaps and midcaps can participate.

Two, again in my view, it will be high beta stocks that will participate in the recovery. I do not think defensives are going to participate. So it will be more of BFSIs that will participate; some bit of auto could participate. Realty stocks although are high beta, but I do not think will participate. So that will be the shape of the things in my view.

I do not think defensives like FMCG and pharma are going to participate. We will have to wait for more details on the package of the government to see which industries actually benefit and that is when we will be able to see movement in the other industries.

The Prime Minister has clearly laid the path for an economy which is not going to be a global-dependent economy. How do you think markets will react to it because this change is going to have far reaching implications? Markets may overestimate the change in the short term but the economy will realise the change in the long term.
Yes, so it is easier said than done. That would not be the case. The way the global economies have developed over the last 15-20 years, I do not think anybody can try to de-link itself from China. Of course the effort will be to reduce dependence and it is obvious that the hidden message is the focus of the government on Make in India; something they have been trying to popularise for the last six years and probably were not as successful.

Also, let me club it with the fact that Prime Minister also announced indirectly that some old archaic laws will be done away with or modified or softened and it is at this point of time that it is a good opportunity to use it because the opponents to the modification in these laws are probably not at a very strong point at this point of time to gather together to mobilise themselves to protest because people are more worried about their individual life on a day to day basis. So we will have a longer and a far reaching impact on the economy and the growth hopefully this time should result in some improvement.

Coming to the portfolio, as I was saying, in the initial bull run it will be BFSI but even in the shorter term or medium term, some focus or interest will be back on investment and industrial-related sectors. For me, within that, cement remains a simpler first beneficiary because the variables that affect the cement industry are much lesser than the variables that affect the infrastructure company. So I think that is where we will clearly see the impression besides high beta like BFSI and auto. Cement within industrials is something that will be there and that can be one portfolio strategy that if one has been underweight or overweight within overall industrials and investment-oriented stocks, cement is something that could straightaway be taken as an immediate investment band.

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