The Hindu Business Line : ‘Take a long-term call’

Is there scope for investors to scale up allocation to select sectors now? Business Line posed this question to Mr Pawan Jain, CMD, Ashika Credit Capital.

“The probability of getting a decent return is quite high if you take a long-term call, say, of three years or more… it does not matter whether it is the power sector or the infrastructure space”, he reasons. Excerpts from the interview:

On which sectors are you bullish at the moment?

At present, we are bullish in cement, banking and hotels. The flavour of the season is energy and refineries.

But we feel there is not much left on the table in the short term from these sectors. Cement will continue to perform well and declare good results for the coming six quarters till the time fresh capacity kicks in and dislocate the demand-supply mismatch. Banking is going to carry on the momentum. The credit cycle will remain buoyant because interest rates are not going to harden more from current levels. The reason for it can be attributed to the fact that inflation has come down way below the RBI comfort zone and is currently hovering at around 3.5 per cent. On the hotels front, tourist inflows may well warm up in the coming season. This will boost occupancy rates and room rents.

Which sectors would you advise investors to avoid at this juncture?

Sharp run-up in some of the energy sector stocks is a cause for concern since the fundamentals have been left behind and liquidity is driving the sector higher.

Export oriented companies may also have to face the brunt of an appreciating rupee. These may remain laggards if the currency continues to appreciate from current levels.

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