Sandip Sabharwal on 3 sectors to get into once market correction's over
Sandip Sabharwal, asksandipsabharwal.com, says FMCG, auto, and consumer durable companies are very well-placed because they are at the cusp of demand recovery. The input cost pressures are lower. They do not have pressure to reduce prices at this stage and as we go into the festival season, demand will be strong. So, they are well-placed and those should be the sectors that should be looked at, at the time of corrections.
In the consolidation or pause that we have seen in the few odd days in the last fall, pharma has been a lot more resilient, and rightly so. Some of the earnings have managed to impress. Will the pharma recovery also get undone or do you think that is a good hiding space?
Sandip Sabharwal: In terms of a defensive sector, pharma is well-placed today. It is an under-owned sector. Companies’ result delivery has been strong relatively, like there have been few companies which have not delivered, but on the whole delivery has been pretty strong.
In terms of valuations, although the valuations are not as cheap as they were a year back, they are also not excessive in the context of the earnings growth picture and the ROE and cash generation that pharma companies do. So, they will relatively outperform. Whether there will be a positive absolute return or not, is tough to say because if markets do see a decent sell-off, then it is tough to make a case that a set of large-cap stocks will move up in that scenario.
Right now, commodities have fallen across the board, which means in the near term the biggest
