Be selective on stocks: P Phani Sekhar, Angel Broking

In an interview with ET Now, P Phani Sekhar, Fund Manager-PMS, Angel Broking, gives his views on the market. Excerpts:-


ET Now: What is the advice that you are giving to your clients given the kind of correction that we are seeing?

P Phani Sekhar: The correction did not come as a surprise to us. At 6100 the valuation headroom was extremely limited considering the fact that earnings have not been spectacular nor are they likely to be going forward. The entire leadership space was shrinking very fast and now companies have growth concerns. For example, RIL or PSU banks which have both growth and balance sheet concerns.

With this kind of a mix, it is very difficult to sustainably go meaningfully above 6100 and stay there. A correction was always there in the offing. This is not a market where you put your last penny to work. This is a market where you need to be opportunistic, have your shopping list ready and keep buying them on declines. It is more of an accumulating stocks kind of a market. We have been advising investors to be very selective in what they want to buy.



ET Now: Now that a lot of macro data has flowed by and 75-80% of the earnings are in the bag, what are the top ideas which can be bought on declines.

P Phani Sekhar: Considering the broader context in which we are operating, it will still be a good idea to look at large cap IT, private sector banks and utilities. Even oil and gas stocks like ONGC for next three to four months. However, Reliance can always be considered as a defensive. Proactively it is a good idea to be cautious about PSU banks, commodities and autos. Autos have become highly speculative and some of the stocks like Maruti are simply running on the back of currency depreciation which is bizarre. Divide the year into two halves. Till October we have a better visibility on the oil marketing companies and more importantly on the upstream. Beyond October we have to be cautious there as well.