Q&A: Shankar Sharma, Director, First Global

With the Indian markets going through a severe bout of volatility owing to global situations, Shankar Sharma, director, First Global, tells Ujjval Jauhari that investors should trust the regular-income fixed deposits more, since lower bottoms can be seen in the equity markets. Excerpts:

How long will the market volatility last? What do you advise investors?
We are highly correlated to the global situation. So, with the downtrend in global markets continuing, we will see downside in Indian markets as well.

The scenario will continue for some time. Having said that, we expect the Indian markets to outperform their global peers. Indian markets will fall less with falls in the global markets, and rise more with positive cues.

We see a 25 per cent downside in global as well as emerging markets. We advise investors to have 30 per cent exposure to the equity markets and the remaining should be invested in regular-income fixed deposits.

Do you see lower bottoms being formed before the market settles down?
Definitely; lower bottoms will be seen.

Which sectors do you think will outperform in FY11?
We are very positive on auto, pharma, banks, information technology and to some extent capital goods. The sectors to be avoided are infrastructure, metals, and oil-related.

What is your opinion on heavyweights like Reliance Industries. Is Cairn India a right option for an investor looking at production expansions?
We maintain a neutral view on this sector, with oil prices likely to fall. In the coming days, we may see crude at $60 a barrel. We are negative on Reliance Industries.

What do you think of the pharma sector?
We are very optimistic on this sector. We will definitely see more consolidation in coming days and very few Indian-owned companies will remain over the years.