Buoyant interest rates to hurt FMCG, we are biased towards IT: Jitendra Sriram

In a chat with ET Now, Jitendra Sriram, Director & Head of Research, HSBC Securities shares his views on defensives. Excerpts:

ET Now: Does it make sense to stay put in the defensive pack?

Jitendra Sriram: I would be positively biased towards the exporting sectors as directionally, the Fed will move towards some easing on the amount of monthly purchases they make. In that regard, I would expect that dollar to strengthen and EM currencies to weaken. One needs to be positively biased towards exports whether it is healthcare, IT or even manufactured exports.

ET Now: There is a lot of room for the IT to move up if consumption stocks do not correct. Where would you place your bets on — consumption coming down to more rational levels, or IT having a further upside over the course of the next 12-24 months?

Jitendra Sriram: Developed markets, whether it is the European zone or the US, are showing incredible traction. They are on a recovery phase right now.

The business prospects for information technology seems to be more buoyant. It is predominately a domestic facing story; however we are not out of the woods yet. Hence, from a local economy perspective, we are still at a low growth phase.

From valuation relative to growth, I would be slightly more biased towards the IT sector, rather than towards the staple sector.

Discretionary expenses are seeing some crunch. The weaker economy, high cost of ownership and buoyant interest rates are having a telling impact on consumer demand. Hence, premium products will take a bit of knock down in terms of growth prospects.