EM valuations steep, India looks expensive: Sanchita Mukherji

There are a host of variables at play, including NPA resolution and the upcoming general elections in 2019. And the joker in the pack is oil prices, Sanchita Mukherji of Blue Edge tells ETNow. Her prediction: Markets will continue to be range bound with spurts of volatility. Edited excerpts:ETNow: Today (Thursday), we are not seeing jitters on Dalal Street. It is expiry day. The markets have been pretty directionless last couple of months. Maybe, global cues. And the earnings season is behind us but you got general elections coming up. Do you think it is going to stay this way and volatility is going to be the flavour of the season?Sanchita Mukherji: Yes absolutely. You have correctly hit the nail on the head. The markets have been very range-bound and I do see going forward the markets will continue to be range bound with spurts of volatility.Because domestically, there is a credit squeeze that has been happening and also there is a lot of discussions on the NCLT and the NPA resolution, which is taking place because of which the credit squeeze has been happening. The general elections of 2019 and of course the joker in the pack oil prices. Now having said that, I do not see a huge current upside from where we are because emerging market valuations are steep and within that pack, India looks expensive. But having said that, I do not see such downside either because there are pockets of value, there are opportunities across sectors, it is a very very stock pickers market. There are a lot of opportunities within sectors to evaluate companies that are doing fairly well. Corporate performance is also coming out as a key factor and if you were to see right now, corporate performance after this entire earnings season has been quite interesting in terms of raw material. Commodity players have posted good results, but people who use raw materials have had their margins squeezed. It has been interesting times.ETNow: That would be the trend. You have talked about rising input cost because right now, this is how it has been passed on. For example, look at FMCG that still has to get more expensive. We are going to see more inflation as logistics gets more expensive. So keeping that in mind -- the fact that we perhaps are going to see an era of slightly higher inflation -- which are the safer sectors? Are people like you maybe rejigging your portfolios?Sanchita Mukherji: Yes absolutely. What you have mentioned correctly is that right now, the pricing power is just not there due to which the margins are being very badly squeezed. But having said that, we are expecting a very good monsoon this year. So once the demand sets in, the pricing power would come, the cost would go down to the customer at the end of the day and that would really contribute to the corporate performance. So, the sector which looks good actually would be logistics. There is a lot of e-commerce business happening. You look at Amazon, Flipkart all of this logistics business would do well, fairly well in the long term. Also specialty chemicals, the affordable housing segment, retail lending would be the sectors one should watch out for.ETNow: A lot of HNIs have been betting on specialty chemicals and you have also listed that as one of your top bets. Could you tell us what is making you so optimistic about this space and what do you think is the way ahead for this sector?Sanchita Mukherji: Within specialty chemicals, there are certain companies which would be having say a monopolistic, almost a dominant role globally in manufacturing chemicals, which are intermediaries for across all industries. For customers who are investors looking at that as a theme, one has to identify stocks within that sector.

from The Economic Times https://ift.tt/2kEPcrX