Market looking ahead to RBI policy now: Piyush Garg, ICICI Securities
1 month data is not to be taken as something which is a confirmed trend and this has happened earlier also. This number is less and less reliable.
ET Now: Firstly your reaction to the shocking IIP data. The market seems to have completely ignored the number. It is almost indicative of the fact that it does not believe this data in the first place?
Piyush Garg: You have rightly summed it up. The data has been volatile. So one month data is not to be taken as something which is a confirmed trend and this has happened earlier also. This number is less and less reliable.
The market is looking ahead to the RBI policy now, and the way 10-year GSEC yields have also dropped from 8.75 to 8.45 odd levels is also possibly a sign that the market is now trying to look forward to a repo rate cut and CRR cut or may be both. So let us see what happens on Tuesday and that will be a more decisive factor in case the market needs to break this range of 5150 to 5400 which it has been trading for almost a month now.
ET Now: You have got the IT big boy Infosys coming up with its earnings tomorrow. What is your expectation?
Piyush Garg: It is a very difficult call. The market is moving more on other macro factors. Possibly Infosys, which used to be at least seven-eight quarters back one of the decisive factors in terms of market sentiment, that has ceased to exist now for the last three or four quarters. So, I expect Infosys to be in double digits of 11%-12%.
Dollar guidance will be something which should pay well for this sector as a whole and the other thing is that possibly this sector is also a good hedge in case the market was to go down, because if the market is going down, there are chances that dollar would be appreciating and the rupee would be depreciating or both would be happening which provides a good hedge as far as this sector is concerned. In case one is long on the market, from a portfolio perspective one can be a little long in tech stocks, especially the large cap ones.
ET Now: How would you play the aviation pack? This buzz of FDI in aviation just keeps coming and going, it was not taken up by the Cabinet this week. We are now given to understand that it could be taken up next week. How would you advice investors to look at the aviation pack?
Piyush Garg: In the last two days, there has been a lot of buzz that FDI is coming and these stocks have been rallying. So it makes sense to sell those stocks in that rally. We have seen that even in FDI in retail also, we have seen so many times it is happening and then not happening.
So these things are very difficult to predict as to when exactly it would happen. So there is nothing to be too gung ho in this sector. From a shareholder perspective, I do not know what kind of returns one can expect over a longer period of time in this sector. It is not that if you open for FDI, suddenly you have a line of various foreign carriers coming to just put money into India.
Many of the large carriers and other private sector carriers like Jet are not able to do so well despite having so strong market presence in India and now even in international operations. So it is a tough sector and globally also it is a tough sector.
ET Now: In a range-bound market, we have seen typical out performance of traditional FMCG spaces like ITC as well as Unilever. Do you think that this traction that we are seeing in some of these names would continue?
Piyush Garg: The analysis is very simple. There is no complication here. It is a defensive play. So that shift keeps happening till the time if you have a view that Nifty may bottom out at the current levels and it might rally further, it makes sense not to buy such sectors rather buy sectors which are likely to give you superior returns as compared to Nifty which again could be a banking, infrastructure, autos, especially four wheelers, capital goods. These are the sectors which have a tendency to give much superior returns in case the market rallies.