Thursday, 6 September 2018

Don't see huge fall in market as fundamentals are improving; FMCG valuations stretched'


The Nifty50 has corrected regarding three hundredpoints from its record high of eleven,760 (touched on August 28), driven by sharp depreciation within the rupee following currency war in rising markets and rising crude costs, that each mighthit accounting deficit of the country.

"Yes there might beinternational pressure on the market, that may lead to delicate correction howeverwe do not see massive fall as fundamentals ar up and heaps of firms in Nifty50 already benefitted from rupee fall," Mahesh Patil, Co-Chief Investment Officer, Birla Sun Life plus Management told CNBC-TV18.

He feels the autumn in rupee may be a little bit of catch-up to alternative rising market currencies like Argentina peso, lira, etc. however the market has done o.k. despite a pointy fall within thecurrency. "The fall in rupee might even be attributable toseemingly increase in interest rates, that was on expected lines."

He aforesaid if tally goes for rate hike then there might bepressure on high leverage firms like below, choosefinancials and NBFCs thatmight see slight weakness.He suggestedmaintaining the correctbalance in portfolio given market valuations and surerate hike.




Autos




In two-wheeler house, Patil aforementioned volume growth is fairly sensible on develop in rural demand, particularly in scooters section. indeed a number ofthe players that lost market share earlier wish to achieveit once more that compacttheir margin, he added.

Volume growth ought to be fairly sensible in automobilesection and there will not be a sway on the margin front, he said.

Commercial vehicle sectionstunned absolutely. "Increase in truck loading might see some fall in demand however the section as an entire ought to report 10-15 %growth this year and new emission norms mightsupport growth next year





FMCG




The bang-up FMCG index, that includes of corporationslike HUL, Marico, Britannia, ITC, Dabur etc, fell four % in last one week.

He same consumption corporations statement is extremely sensible howevervaluations square measurestretched, that the market is realising currently.

He sees some quantity of derating in FMCG stocks on assumption of charge per unit rising and high valuations however the structural story continues to be intact. "Correction from here on may show enticingvaluations. As earnings square measure expected to be steady, any fall of around 10-15 % from here on may well be a chance for worthshopping for."



Defence





New valuation policy associated with the margin on defence orders may drive these stocks down a small amount however essentiallysound firms with robustproductivity can perform higher, he believes.

Overall within the PSU area, plenty of firms derated recently that appears to be enough chance to seem at the area once more. "Good business dynamics give a chance for semipermanent





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