With the Union Budget 2018 just around the corner, the market has entered a ‘wait and watch’ mode, believes Ratnesh Kumar of BOBCAPS.
“Clearly there is a big event on the horizon… there is a wait and watch on earnings front as well,” Kumar, MD & CEO of BOBCAPS told CNBC-TV18 in an interview. Plus, the Street is slightly wary on long term capital gains (LTCG) tax. This could be counter-productive. But if the taxation does not come through, this will be a huge sigh of relief, he told channel.
Looking at the big picture, Kumar believes going forward growth recovery and repair of balance sheets could be a way to play the markets this year. But investors should be wary of risks from oil, among other things.
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“If it crosses a certain level, it will start to be a worrisome thing. Along with it, next 12 months will be election-heavy and political issues could take over economic priorities and the Street will watch that,” he said.
Kumar gave out views on a sector-specific basis as well. Here is what he had to say.
He believes there could be a situation where inflation and yields inch up a bit. But there are early signs of credit growth revival as well. In that scenario, it is good for financials. “System growth coming back is good for large banks and financials in general,” he said.
The gain in IT stocks is an effect of rotational moves. The relative valuations were left behind when money was being moved in other sector.
Kumar prefers four-wheelers against two-wheeler names. “When there is an element of cyclical recovery, be it because of restocking and not much growth, they deliver better alpha in terms of growth and returns,” he told the channel.
Kumar sees this space as more of a global play. With economic momentum to be better, he thinks this is one of the value spaces left in the market.moneycontrol