Private banks to outperform market; do like IT, pharma & MNCs in FMCG space: Ajay Bagga

In a chat with ET Now. market expert Ajay Bagga talks about the sectors, he is most bullish on.

ET Now: if the market were to go down, where is it that you will put in the money? what areas, what sectors, what themes will you prefer?

Ajay Bagga: I would look at global defensives i.e. pharma and IT stocks, given a slowing domestic consumption story. I would also prefer MNCs in the FMCG space. I really like FMCG MNCs for their high ROEs.

Such stocks are trading at high price multiples, but good minority shareholder protection, a lot of cash, high payout ratios and huge margins make them a good play. If you look at margins of toothpaste makers, they are as high as 58 per cent.

All the MNC pharma companies command gross margins anywhere between 55 per cent and 60 per cent. I am happy, if they go down further as there could be a good entry point. Lastly, I like perennial favourites, private banks. They have still got a lot of steam left. Private sector banks would outperform going ahead, yet I would look at these four themes pharma, IT, MNC, FMCG and private sector banks.