Share Bazaar News India

Anish Damani of Emkay Stock Brokers, said he would prefer to wait before calling further upsides, because he expects some more negative news over the next few weeks. But he also points out that despite the recent flow of sector specific negative news, stocks have been holding on to gains.

Excerpts from CNBC-TV18's exclusive interview with Anish Damania:

Q: What is your own sense of the local situation right now, liquidity is not too good and inflation overhang remains,; are you ready to call the market in terms of an upside from hereon?

A: Not so much at this point. We might prefer to wait a little bit before we call further upsides. But just one thing that I would like to point out to you is that the steel sector, for example, has been seeing a series of negative news. Tisco for example has been holding on to its gains ever since its low on March 24. A lot of talk about cement is also following in line. But if you look at cement stocks, they have also behaved well over the last few days.

The IT sector made its low some time back, but have also bounced up about 5-8% up from its lows in this market. So, I think what we are actually seeing is that some of the sectors are holding up despite the negative news. There might be some more negative news to come over the next few weeks. We see at that point of time as to how we should look forward to that.

Q: What are you expecting from earnings from the technology sector? That has been the pillar of strength for the last week to week and a half or so. There has been massive re-rating or move ups in some of these stocks. Do you think that they could actually sustain a 20% growth rate?

A: We are not looking at sustaining 20% growth rate at least for this coming year in terms of earnings, it could be a little muted than that. Next year could be more by way of a higher tax regime, which is expected to mute the growth rates. However, maybe the stocks have bounced off their lows. I have not done the complete check as to how this quarter’s numbers are going to be; maybe we should be completing that in a day or two.

Q: For the FMCG space, has it been really a run for cover rally that we have seen or is there more to it that would warrant betting your money?

A: I think in the FMCG space, if I look at Lever’s results, their topline has grown well. Even their bottomline has grown about 20%. While some might argue that this was expected for Q4, but what interests me is that the management has come out and said that the kind of growth rates of about 12-14% in volume terms are expected to be maintained. So, that is a good sign that I say from HLL.

In the case of ITC, when last year people were expecting a drop in cigarette volumes, that has not happened despite a steep duty hike. So, ITC also looks okay. But they are more being played out as defensive bets at this point in time, which has worked very well. So, I think that continues.

Q: You spoke about possible bad news coming out over the next few weeks. Suppose you get something from the RBI between now and say the credit policy, assuming inflation this week also comes in worse than anticipated, how would you actually go about playing the interest rate sensitives at this point?

A: I don’t know how should one respond to that because if I look at it, the 10-year government bond has moved up to 8% already. Also, the RBI was talking more about the supply side constraints to be handled by the government. Over the weekend, they have actually issued bonds. I don’t know whether he is going to go in for an interest rate increase of CRR hike. It looks less likely to me that he would do that on that account.

Source: Moneycontrol.com