All companies and sectors where tax rates are higher than the GST would benefit including textiles, logistics, multiplex and entertainment tells Nitasha Shankar, senior vice president, research, YES Securities to Feonline. She further added that given the outlook of monsoon and impact of the 7th Pay Commission entire consumer and agri space is looking lucrative. Below are excerpts from the interview:
Q. How do you see Indian equity markets post Brexit?
A. Domestic equity markets have already bounced back after Britain decision to leave European Union. In the near term, there is uncertainty related to the event which will affect global markets including ours. However given the fundamental strength of our economy we do believe that in the long term our markets should continue to trend upwards.
Q. Which sectors may suffer the most due to Britain exit from EU in the long run? Why?
A. The impact would be more near term particularly for the IT companies and others focused on doing business in the region as decision cycles could get elongated due to the uncertainty. In addition to this there could be cross currency headwinds as well. But these negatives should smoothen out in the long term.
Q. There are expectations that GST Bill will be passed this monsoon session, in this scenario which companies and sectors will benefit from the move?
A. All companies and sectors where tax rates are higher than the GST rate would benefit including textiles, logistics, multiplex and entertainment etc.
Q. How Seventh Pay Commission is beneficial for equity markets? Which stocks will get a boost with the implementation?
A. This would lead to higher purchasing power which in turn would help all sectors related to consumption including Food, Autos, FMCG, Consumer Durables etc .
Q. How do you see valuations of Indian equity markets?
A. The valuations from a long term horizon are still attractive with markets trading at nearly 16 times forward multiples.
Q. Where do you see Sensex and Nifty by the end of March 2017 and why?
A. We see the Nifty touching levels of 9,000 and higher driven by improving economy and consequently corporate earnings, transmission of interest rate cuts leading to better credit growth, growth in consumption driven by better monsoons and the pay commission continued focus of the government to revive the manufacturing sector.
Q. On which sectors you are bullish right now and how do you see them going forward?
A. Given the outlook on monsoon and impact of the 7th Pay commission we are bullish on the entire consumer space. In addition to this we are also bullish on agri and infrastructure.
Q. What are the key risks for the Indian equity markets?
A. The key risks to the markets include global macroeconomic developments, commodity prices and recovery undershooting expectations.
Q Which are the sectors one can avoid?
A. We are neutral on IT as of now and would prefer to wait till there is more clarity on deal pipelines and decision cycles, which we expect to hear from the management during the upcoming result season.
Q Which emerging sectors are looking good buy in the present markets conditions?
A. We are positive on renewable energy space among the emerging sectors.