Avoid metal stocks due to onset of global deflationary environment: Pramod Gubbi

In a chat with ET Now, Pramod Gubbi, VP, Institutional Equity, Ambit Capital, shares his view on the metals space.

ET Now: What is the sense that you are getting then when it comes to metals? Should metal stocks continue to remain ‘short’ and ‘avoid’ or would you buy into trading rallies like what we saw in the Friday’s trading session?

Pramod Gubbi: I would generally avoid this sector in a global deflationary environment. Looking at the way China is heading, there is a significant scope for importing deflation. That will not be a great news for commodity stocks, particularly metals.

On top of that, it is not like India has any particularly great advantage in terms of manufacturing efficiency on any of these metals. So, by and large, I would avoid the sector.