While an abundance of liquidity has resulted in a surge in the market, the rise in capital expenditure by companies and increased government spending augur well, says E Prasanth Prabhakaran, senior president & CEO (brokerage), Yes Securities. He tells FE’s Bharadwaj Sharma that we might be seeing the start of an infrastructure-led capex cycle. Excerpts: What led to the recent rise in the markets? The market at this time is liquidity-driven to a large extent. Ample amounts of money are flowing into the market with domestic liquidity abundant and FIIs too showing appetite in Indian equities post the UP polls. Liquidity from retail investors has shifted from direct equity participation to the MF route. Where do you see the indices heading? The next three or four quarters may not see too much of an uptick in the Nifty and Sensex levels but individual stocks will do extremely well. It will be an individual stock-driven market rather than Nifty giving extraordinary results.
What are your brokerage’s top picks? In the rural segment, we like Finolex and Swaraj Engines. We also like VST tiller which is a debt-free company. Apart from that we like Pidilite in the pure FMCG space. In the housing finance space we like Gruh Finance and Can Fin Homes. In the real estate space though not in the affordable housing space, we are bullish for Godrej Properties and we expect a 20-25 % growth in the revenue stream. In the infra space, we like L&T as their receivables are under control. In the smaller midcap space, we like Sadbhav Infrastructure. Which sectors are you bullish on? One of the sectors that we like is agriculture.
We are also bullish on sectors relating to the rural economy and agriculture-led expenses. We are also bullish on the FMCG sector where many companies have gained market share in the rural markets. Dabur and Marico have a clear roadmap to penetrate the rural economy. Then we have affordable housing and housing finance and infrastructure which should do well over the longer term. Where do you see a bearish trend? Sectors that we have asked clients to stay away from for at least the next three quarters are IT, pharma and telecom. We would like to see the IT industry change from being to a service-led to a product-led industry. As pricing remains so much under pressure and balance sheets remain under stress, we will wait for telecom firms to get merged.