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Pacific Paradigm: Recent reconcile in market to continue unless a global shock strikes!
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“Investors should up their equity exposure on ever dip,” says Punita Kumar Sinha, managing partn
In an interview with Bloomberg UTV, Punita Kumar Sinha, managing partner at Pacific Paradigm Advisors, said equities will continue to outperform unless there’s a global shock. “Reserve Bank of India's (RBI) signal on lower rates has been a sufficient boost for market, and investors need to keep a close eye on inflation going ahead,” she added.
She is of the view that rate-sensitive counters
(auto, bank, realty) will see a positive turnaround, and cyclical stocks
are a better bet than defensive shares. “Investors should up their
equity exposure on ever dip,” Sinha advises.
She also spoke about India’s fiscal deficit concerns, global headwinds and other Asian peers. Below are the key highlights:
Market outlook:
• Recent rally driven by turnaround in sentiment
• Don't see India underperform without global shock
• Selling in 2011 got self- fulfilling as markets declined
• Need to continue watching inflation
• RBI's signal on lower rates has been sufficient for markets
• Don't see distressed valuations in market
• Investors should up equity exposure on every dip
• Need to look at rest of market’s post consolidation outperformance
Sector-wise:
• 2012 to see cyclicals do better than defensive stocks
• Rate sensitives to do well with rbi lowering rates
• Recommend adding positions in manufacturing, infra and power stocks
• Expect to see steady returns from IT, no outperformance
• Expect positive returns with 18-month view
India’s widening fiscal deficit:
• Indian fiscal deficit situation pretty bad, not much better than EU
• India's growth can help improve fiscal situation
Global cues?
• Global economic data remains mixed
• Continue to see structural problems in Europe
• EU crisis resolution only with fiscal union
• US economy still not growing rapidly enough
• India, China, Korea preferred among Asian basket
• Chinese market looks attractive, cheaply valued
• Need big global recovery for 15% CAGR over 10 years