At the moment, the environment is such that valuations are still high and no economic recovery has been seen on the growth. At the same time, fund flows are good, but earnings growth assumptions need to be more realistic, says Anand Tandon
With the Nifty falling around 2 percent over the last 10 days, market expert Anand Tandon believes the fall may continue through the month of December.
At the moment, the environment is such that valuations are still high and no economic recovery has been seen on the growth. At the same time, fund flows are good, but earnings growth assumptions need to be more realistic, he adds. According to him, all this combined makes for a bearish position on the market.
He believes it will be a good idea to bet on domestic or economic play, but it has been played to the hilt. “So you have to see significant downsize, to buy again,” he told CNBC-TV18. Other than that, he advises investors to hold on to select IT and pharma companies.
However, he is not in a hurry to buy any sector or companies. He says if an investor or trader is planning to bet on the domestic consumption theme, then one must remember that the rupee has been weakening.
Moving on to the much debated commodities space, Tandon believes it is weak and he sees no reason why anybody should own metals. He adds that 50 percent of the growth seen in the US market is coming from oil and if oil prices continue to fall then US may once again see a slowdown.
The index has a 50-55 percent weightage from companies that are either exporting commodities or exporting something else, therefore the index will have some sort of trouble in moving up from here.
Among midcaps, he likes Motherson Sumi and Bharat Forge , though they are expensive at the moment. In the pharma space, he is bullish on Cadila and Wockhardt , but it may test your patience. There are a wide range of companies, that one must buy if they get cheaper, says Tandon.