Prefer large cap IT and pharma stocks: Devesh Kumar

In a chat with ET NOW, Devesh Kumar, MD & Country Head, CIMB Securities, shares his view on markets and IT and pharma stocks.


ET Now: Do you think traders and investors should approach this market differently? Whereas there is momentum in cyclicals, industrials and some banks, should investors actually use the rally to sell out of industrials and banks? On every decline, should they still continue to buy IT and pharma?

Devesh Kumar: I will agree that investors have to treat this market differently and in each of the sectors, there could be some winners, like in IT and pharma we would prefer the large ones. However some of the midcaps where the management quality is good but by and large, their business model and management quality is not of high quality and that is where one has to be very careful. Similarly if you look at power, telecom and other segments, there again you can choose winners and in the next two years there is going to be a big shift in the economy. On consumer side, the consumer story also is going to play but not only FMCG there could be some play in say, two wheelers and then elections are around the corner. These also are going to have impact on a lot of spending. So we feel that in this market, long term investors should look at companies where the balance sheet is good, management quality is good and the demand side is going to remain good and from the policy side, environment is going to improve.