Keep a balanced portfolio; domestic cyclicals make a compelling case: Ajay Bagga

In a chat with ET Now, Market Expert Ajay Bagga shares his views on how one should approach the market.

ET Now: Will the next driver for the markets be the budget? Would you look to increase exposure on every dip?

Ajay Bagga: Yes. The returns are going to be very lumpy. You are not going to get slow and steady returns or concentrated returns in number of days is what the market will really show.

If you see the behaviour, April was largely flattish market and in the month of May, it ran off in anticipation much before the elections results. We saw the market running off and then we have seen a cooling off this week.

I would suspect that couple of weeks of a slow-steady market followed by a very sharp run up in anticipation of the budget unless some big announcements come in next week. Once the parliament is in session, the government will go a little slow. They will not make that sharp announcements between June 4-10, until the President speech is over.

Post that, I expect the slew of announcements to come in and then the budget. These are the two big catalyst. It is an attractive market. Now is the time to get in on every dips and keep a balance portfolio.

Most stocks like HUL are over owned. The consumption or consumer staples are not being that good. High beta being better, we have to see the fundamental story. Keep a balance of IT and pharma, even the consumption stories as well as the high beta stories.

ET Now: Will the high beta names be beneficiaries of cyclical recovery? How should one approach this basket as a whole?

Ajay Bagga: The very strong Indian recovery may not be largely within this year, but maybe more in FY16, but the markets will front-end that recovery.

The domestic cyclicals definitely have to be played. But, we must not forget that it is a 60% consumption economy. There is also a global demand increase that is coming which will boost IT and pharma. Keep it balanced, but domestic cyclicals make a compelling case.