Holland said he is positive on private banks, FMCG, select auto and housing finance companies. When asked on the sectors he is bearish on, Holland said he is still not convinced that pain is over on IT, pharma and public sector banks.
The benchmark indices rose to a record high on Tuesday, a day after the ruling Bharatiya Janta Party (BJP) winning Assembly elections in Gujarat and Himachal Pradesh. The benchmark indices, Sensex and Nifty, rose more than 0.70%, closing at a record high of 33,836.74 and 10,463.20, respectively. The rally was led by auto and consumer discretionary stocks, with the auto index advancing the most, by 3.42%. All the sectoral indices of BSE except Teck and IT gained. The foreign portfolio investors remained net sellers to a tune of Rs 407.83 crore, while domestic institutions net purchased shares worth Rs 357.40 crore, provisional data showed. Maruti Suzuki, Hero MotoCorp, and Tata Motors were the best-performing stocks in the Sensex, gaining 5.33%, 4.70%, and 3.39%, respectively. Market participants said the markets rose on the hope that the government will take steps to boost rural income. “Now they will make a push towards rural expenditure. The key to the economy moving ahead is to have the rural economy picking up,” said Andrew Holland, chief executive officer of Avendus Capital.
Holland, however, expressed concerns about the ability of the market to take bad news. “Monday morning was a warning sign of what could come if there is some real negative news. This shows that it is liquidity driven and fundamentals are yet to catch up,” Holland added. R Gopakumar, chief executive of Reliance Securities, said there will be a lot of rural focus, with the elections not too far, and this will drive consumption. “Traditionally, in the last year of the government, it is the rural economy which gets focus,” said Gopakumar. He added that the fiscal deficit and budget proposals will determine the course of the market in the near future. “Some reform should come on the direct taxes side, which can help in terms of consumption and revive the economy. These are the things that could affect the market in the next three to four months,” he said. Holland said he is positive on private banks, FMCG, select auto and housing finance companies. When asked on the sectors he is bearish on, Holland said he is still not convinced that pain is over on IT, pharma and public sector banks.