Bearish on comsumer names like HUL, ITC: Parag Thakkar, HDFC Securities

In a chat with ET Now, Parag Thakkar, Head Institutional Sales, HDFC Securities, shares his views on markets. Excerpts:

ET Now: Let us start off with the interest in the consumption theme in the run up to the budget and all that is going to be said about GST, do you think this is just a sentiment rub off that we are seeing?

Parag Thakkar: We have already seen a great run up in consumer stocks and some part of the move was also driven by crude oil price falling. ITC of course is a valuation catch up where it was grossly undervalued compared to other consumer names so it is just catch up game.

But, we will have to see in budget what kind of excise duty hikes they again impose on cigarettes. We have already seen a sharp drop in volume growth for ITC so I would not agree to buy ITC at these levels. Probably in many consumer names except for paint industry where the GDP linkages is very high, for example if GDP growth comes back to 7% the volume growth in companies like Asian Paints can be as high as 12% to 14% and with that some kind of margin expansion can also play out because commodity prices are falling. So I would like to stick to economy related consumer names and not very safe names like HUL or ITC.