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Remain overweighted on India;  Positive on private banks, Nbfcs, Oil & Gas Space: BNP Paribas


Manishi Raychaudhuri, Asian Equity Strategist, Equity Cash Asia Pacific at BNP Paribas, believes that the recent 6-7% drop in markets has caused some stocks and sectors to fall more sharply. According to him, it is the need of the hour to be cautious vis-à-vis the sectors. He believes that the stocks that corrected the most during this phase may start to look attractive. However, despite the correction, its overweight position in India remains unchanged.

In an interview with CNBC-TV18, he said, “It’s really selective right now. I think sectors and stocks that have corrected much more during this correction phase may be starting to look attractive. We are not making any changes to our Indian position in the Asian model portfolio. We had an overweight position prior to the correction, we are maintaining this position although we have recently made some market changes outside of India. “

“In the short term, this volatility that we are seeing could continue a little longer, but in the longer term, a positive position on India due to the recovery in consumption, the low penetration of consumer goods, services financial, the usual things that come to mind – these themes are well intact and will continue to support financial markets for the foreseeable time frame.

Regarding the oil and gas space, Raychaudhuri said: “It is a space that attracts us. We have increased our exposure to the oil and gas sector, both through pure oil explorers and conglomerates. “

Regarding the increases in telecommunications tariffs, he said: “This does not surprise us at all. We talked about this consolidation leading to increased pricing power in the telecom services sector, and it just happened. So this 20 percent tariff increase announced by the industry major comes as no surprise to us. We have significant exposure to the telecom services sector in our portfolio, both through pure play and conglomerates, and I think now is not the time to exit that position. We have significant exposure to space and will continue with that for now. “

Regarding banks, Raychaudhuri said: “The poor short-term performance over the past month or so is simply about the holding patterns of FIIs. Foreign institutions and even large domestic institutions – they have significant stakes in private sector banks and, recently, in PSU banks as well. So when valuations tend to stretch and foreign institutions in particular, when they see the need to reduce their positions, they tend to sell what they can. They tend to sell what they own to a large extent.

“I think this phenomenon of over-ownership, which I can use, for lack of a better expression, is perhaps responsible for this short-term underperformance of the sector that we have seen,” said Raychaudhuri.

He added: “At the same time, when looking at the medium term over the next two or three quarters or even a slightly longer period, we expect two things: on the one hand, we expect to a resumption of credit growth due to the resumption of the investment cycle and the stability of consumption. Second, we expect concerns about non-performing loans to ease even further. We have a significant presence in the financial sector, spread across private sector banks, to some extent in public sector banks, as well as insurance and NBFCs.

For a full interview, watch the accompanying video.

(Edited by : Dipikka Ghosh)

First publication: STI


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