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Select buying can lead to gains of 15-20%: Birla Sun Life

Sashi Krishnan, CIO, Birla Sun Life, maintains a cautious approach towards upstream companies, while being positive on oil marketing companies. He expects OMCs to see an improvement in earnings with falling prices.

Despite a bounce-back after five consecutive sessions of decline, data indicates FIIs are still on the sell side. Cabinet nod for GST, which has paved the way for its passing in the current Parliament session, has also boosted market sentiment. In addition the not-so-hawkish Fed statement too led to buying.

If one does not concentrate on Nifty, select buying can possibly lead to good gains, says Sashi Krishnan, CIO, Birla Sun Life. Speaking to CNBC-TV18, he said valuations look interesting in pockets and feels one should be able to make returns in the region of 15-20 percent over the next one year, without looking too much at Nifty.

Discussing the oil and gas space, Krishnan said that a decline in under-recoveries has benefitted upstream companies but crude below USD 60/bbl remains a significant challenge for them. He maintains a cautious approach towards upstream companies, while being positive on oil marketing companies. He expects OMCs to see an improvement in earnings with falling prices.

Krishnan expects implementation of GST to boost earnings growth of companies over the next 18-20 months.

Below is the transcript of Sashi Krishnan’s interview with Ekta Batra & Anuj Singhal on CNBC-TV18.

Anuj: Is the correction a good buying opportunity for you. Yesterday we had domestic institutional investors (DIIs) buying quite a bit, I am assuming you would have also participated in the market?

A: Market at 7,900 in our opinion is an interesting level to buy into because we do not believe that the market can correct too much. There will be intermittent corrections in the market but we do not believe the market can correct too much because there is enough money in the sidelines that is waiting to buy into India and a lot of the correction that you have seen over the last couple of days is primarily because of the rouble effect where you have seen big correction in the rouble and most emerging markets corrected significantly in the expectation that Yellen would be more hawkish than she actually was. Therefore, given the fact that the Fed statement wasn’t very hawkish, most Asian markets recovered today, India recovered again but wherever market correct to 7,900 levels, we believe would be a good buying opportunity for us.

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