Right time to look at growth stories, build portfolio

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Ankit Doshi: Jan 31 2013, 01:32 IST

After a stellar performance last year, Indian equity markets will consolidate and look for structural changes this year, says Sonam H Udasi, head, research, IDBI Capital Markets. In an interview with Ankit Doshi, Udasi says the focus would thus remain on companies with rich cash flows and high return ratios. Further, mid- and small caps are seen outperforming the frontline stocks this year. Excerpts:

RBI surprised everyone with a CRR cut...

The outcome of the RBI's third quarter policy suggests that it is open to growth more than it was a few months ago. By the end of FY14, the market could see further loosening in interest rates. In our view, the RBI could reduce an additional 50 basis points between now and FY14 end.

What are your views on India’s overall economic and market conditions?

From a sentiment perspective, India is in a much better position than it was six months back. There are still some concerns in terms of the twin deficits that we are running. The market has rallied on expectations that things have improved. From here on, market will consolidate and look for real changes on the ground.

At present, there are only talks that economic conditions will improve and that GDP growth will start to move up. We are yet to see any signs of that. But, this is the time to build a portfolio by looking at growth stories. If sentiments do turn positively and meaningfully, a lot of stocks that are not part of the benchmark will get

... contd.

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