BSE Sensex, NSE Nifty brought small gains in 2013, for 2014 buy into defensives, cyclicals: Dipen Shah

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BSE Sensex today inched up by nearly 28 pts to end at 21,170.68 in the last trading session of the year and a gain of 9 pct for 2013, while NSE Nifty rose by 12.90 points, or 0.21 per cent, to end at 6,304. For full year, Nifty gained 6.75 pct. Reuters BSE Sensex today inched up by nearly 28 pts to end at 21,170.68 in the last trading session of the year and a gain of 9 pct for 2013, while NSE Nifty rose by 12.90 points, or 0.21 per cent, to end at 6,304. For full year, Nifty gained 6.75 pct. Reuters
SummaryApart from BSE Sensex, NSE Nifty story, investor should focus on select stocks in defensives, cyclicals.

can find good quality stocks (including mid-caps) in these sectors, which are available at reasonable valuations.

On the other hand, we have a cautious view on the cyclical and investment-oriented sectors. The Government has announced some reform initiatives in the past few months. However, our interactions with managements indicate that, companies have not seen any major change in the ground realities. We believe that, effective implementation of the initiatives will result in better prospects for these sectors. Also, more initiatives need to be taken to revive investment interest. In these sectors, one should look at companies having credible managements and strong balance sheets. Companies having net cash in the balance sheets would be preferred as they will not be impacted further even if the economy recovers at a slower pace than expected. Moreover, they will benefit in case interest rates continue to rise.

The concerns over the next few months will be on the pace of the Fed tapering and on the outcome of the general elections in April – May 2014. While an accelerated taper will impact liquidity flows into India, the absence of a clear mandate for any particular political party will be negative from the reforms perspective. This can have a bearing on the growth rates for the next fiscal.”

By Dipen Shah, Head- Private Client Group Research, Kotak Securities

NOTE: The views expressed are those of the author

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