Despite the weakening economy, the broader market looks positive over a period of the next twelve months, Credit Suisse's managing director (MD) Neelkanth Mishra said Wednesday in interaction with CNBC TV18.
Despite the weakening economy, the broader market looks positive over a period of the next twelve months, Credit Suisse’s managing director (MD) Neelkanth Mishra said Wednesday in interaction with CNBC TV18. Headline indices – Nifty and BSE 100 will hold up and do well but Mishra is a little wary about the small and mid-cap stocks. According to him banking, rate-sensitive sectors, utilities and investment trusts will be in focus over the next 12 months, while real estate can also be a good bet considering the signs of stability sweeping in the sector.
Considering high levels of uncertainty in the global economy, the lower yields and the deteriorating fundamentals, acceptance to high price to earnings is much better. He said the IT stocks are expensive in view of a high price to earnings ratio. Mishra’s outlook on a few IT stocks is marginally overweight given they are well managed with good cash flow. He said he will not go underweight on the IT sector. Notably, TCS’s results for the first quarter of FY 2019-20 failed to meet street expectations.
With regard to the aviation sector, Mishra said it is facing sluggish discretionary demand and low airline traffic volumes. “The fact that crude oil prices have been weak meant that few performing companies that were of good quality were very well owned. If there are stock-specific issues then the sectoral tailwinds generally do not support the stock,” Mishra said.
On Consumption sector, Mishra said it would take around nine to twelve months for the borrowing rate to come down by 200 basis points. He said as most of the NBFCs which were expected to have defaulted have done so, it will take that long for the market to become less wary. The consumer sentiments will likely pick up in the next twelve months.