Good time to invest in equities: Lalit Nambiar, UTI AMC

In an interview with ET Now, Lalit Nambiar, Sr VP & Fund Manager, Head-Research, UTI AMC, speaks about the market. Excerpts:


ET Now: Which way is the market headed? Increasingly it seems to be not just global, but domestic factors also which seem to be weighing on the market sentiment.

Lalit Nambiar: We would rather look at valuations and at close to 12 or 13 times from as far as forward PE is concerned, these are very good levels to invest in from a one-year perspective. In the short term, you will have near-term risks, you have a Euro situation which is not too certain, you have a situation in India on policy, but the fact is there is some kind of earnings risk on the downside. It is not going to be very significant from here. We think that at these levels it is a reasonably good time to invest in equities from a one-year perspective.

ET Now: What sectors would you look at from an investment point of view that looks exciting at these levels?

Lalit Nambiar: I would not use the word exciting, but I would say that given the circumstances when there is so much uncertainty around, you would look at dependable stocks and dependable sectors and it is not very difficult to guess which ones. It would be exporting companies or companies which play the domestic consumption theme. Even though valuations may have bid up, but the dependability of earnings in these companies matter more in uncertain environment such as today’s and that is why we would prefer IT, pharma and FMCG.

ET Now: What is our stance when it comes to the rate sensitives because they have been the ones which have been beaten down the most. Do you not think that if a recovery were to kick in, it will be banks which would actually pull up first?

Lalit Nambiar: We do have a selective play there and we will probably look at the private sector banks rather than the heavily-regulated PSU banks because we would rather play it that way because there is more uncertainty when it comes to the public sector banks. Yes, we would obviously have significant weightage towards banks given the way the index lies. But having said that we tried to balance that beta with more of the dependable earnings from FMCG, IT and pharma.

ET Now: Within the IT space, wiil the bias be towards the large cap IT stocks like TCS and HCL Tech or would you look at midcap ones as well?

Lalit Nambiar: Without getting into stock names, I would say yes the larger caps would be preferable because it is very difficult in today’s circumstances to call on micro or niche businesses and how they would go given the way Europe is panning out and their exposures in each of these businesses are a little bit difficult to catch. So we would rather play the larger caps in an uncertain environment.

ET Now: What is the view on the currency because increasingly it seems like any attempt by the central bank has been failing to arrest the fall in the currency and at what level do you feel the rupee actually going to end in terms of a bottom?

Lalit Nambiar: I do not think the central bank is trying to look at a target and it is just trying to ensure that even if there is a downslide, it is controlled. Having said that it looks like we are more or less done for the year. May be we get a little bit more from here, may be 55.5 is probably what the worst case could be because things around the globe are also slowing down. So, relative to other currencies, we should not be doing so badly. Our sense is that things probably would not get too much worse from here.

ET Now: From a broader market point of view, what is it that you think could trigger an up move? Will it be good monsoon, will it be some sort of a signal from the RBI as far as cutting rates are concerned, which looks tough right now given where inflation is?

Lalit Nambiar: Monsoons definitely and hopefully something from the government, may be a fuel price hike, is being talked about. Even if it is a marginal one, it will send a signal. Right now there is a lot of pessimism about India, in Indian markets as well as with international investors. It is an under-owned country as a market. So any little bit on the horizon will really help push up stocks in the markets.