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| 'Sensex fair valuation seen at 17,500' |
| BS Web Bureau / Mumbai Aug 20, 2009, 09:50 IST |
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Hitesh Agarwal, Head of Research, Angel Broking sees Sensex fair valuation at around 17,500. In an interview with BS Web Bureau he shared his views on some of the buzzing sectors like auto, banking and sugar.
Q) Do you support the view, that markets driven by liquidity have gone past the economic recovery?
A) I do not think that the market rally has gone past the economic recovery because our markets have reacted in tandem with the world markets. The outlook is quite positive for the markets in the future as our economy is very strong.
Q) Apart from IT, which sectors are likely to be less impacted by monsoon?
A) Banking and Insurance sector will perform better and I am more bullish on the private sector banks as they pursue some schemes more aggressively like credit cards, loans and also that they are not forced to write off bad debt. The PSU banks have recently witnessed a rally backed by bond yields and debentures but in the long term the rally would not be sustainable. Monsoon impact will be more on the GDP (Gross Domestic Product).
Q) Outlook on the auto sector?
A) Auto stocks depend upon monsoons and consumer demand. Auto caters to both rural and urban markets. However, Mahindra & Mahindra is the only company which produces tractors and thus will get directly affected by the low rainfall. Stocks like Bajaj Auto, which caters to the urban population is likely to be less impacted, while Hero Honda which is more rural oriented may be more impacted. Government has done lots of things to increase the rural demand, like the loan waiver plan for the farmers and the Bharat Nirman project.
Q) Sugar stocks are in limelight nowadays, what's your take on this sector?
A) News flow in this specific sector is very strong. The rally in the sugar stocks started in 2008. Valuations wise this sector is not very attractive but it stands a long time favourite. Scantly rainfall in India and overflow of monsoon in South America has led to the destruction of crops there. Thus the price of sugar as a commodity has shot up to record levels resulting to the recent rally.
Q) Do you think the Sensex will be able to cross the 16,000-mark?
A) IIP data will continue to act as a trigger to the markets. This data is looked by us as it represents what is happening in any sector. I believe, 17,500 is a fair value for the Sensex.
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