Are there opportunities to buy afresh in pharma space after the recent correction? Also, are you interested in Glen Pharma’s upcoming IPO?
Glen is an interesting company but the IPO valuations are not so attractive but listing gains will always be there. People do not necessarily need to use their minds in terms of what exactly they are buying as long as it is a decent company, listing in a decent market. The listing will pop.
There has been some cooling off in the pharma space. We have also seen decent results coming out from many companies including Dr Reddy’s and Sun Pharma. Sun Pharma trades pretty cheap relative to the rest of the pharma basket as well as it’s historical valuations. The performance has not been consistent and so they sounded reasonably positive. Sun Pharma could look interesting. Dr Reddy has been doing well, it has come off the top. It is a general correction and not a selloff. From the current levels, Dr Reddy should do reasonably well.
Whether the next US president is a Democrat or a Republican, the market seems to have made up its mind to go up.
Initially markets were falling because Trump was behind, then it was rising because Biden was winning easily, then it was a Blue Wave. I think all sorts of things are there. Fact of the matter is markets globally are in some sort of frenzy. In the Indian context, the BFSI companies have delivered results that have been better than expectations, especially in terms of asset quality. That has been a big driver of the near term market move.
Many of the earlier performing sectors like IT, FMCG or even Reliance are significantly off their tops but the financials have picked up. First HDFC Bank reported good results. Then other banks started to come out with their results. ICICI numbers were very good and SBI also indicated stability in asset quality. So that is helping the markets in the Indian context.
After SBI’s earnings and the brokerage upgrades, the conviction in sectoral churn towards banks has only got stronger. Do you agree?
SBI always gets upgraded after results but whether they will be able to deliver or not is something which remains to be seen. But some of the other banks like ICICI continue to have value. Ultimately, sometime next year, there will be a 20-25% up move from the current levels.
Some of the NBFCs are still beaten down but then there is no clarity of revival there. That is why they are subdued but eventually they should also come back. So having sectoral leadership in financials is one thing that we need to be cognisant of. Inflationary pressure in the Indian environment has picked up substantially and the CPI figure which will come out next week could be a shocker because of the way food inflation has been and the way other commodities have rallied.
We need to be cognisant of the fact that the scope of monetary easing has effectively gone and a tightening over the next few months could be a possibility. Globally liquidity will be ample but in the Indian context, there is an inflationary pressure which is absent in many other parts of the world.
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