Have an underweight rating on consumption sector, says Saion Mukherjee of Nomura

In an interview to CNBC-TV18, Craig Chan Head of Emerging Markets Strategy at Nomura and Saion Mukherjee Head of Equities Research-India at Nomura, shared their reading and outlook on specific stocks and sectors.

Craig Chan said, "The overall environment is positive from the global side. We are seeing the Fed cycle reaching a mature phase, we are seeing this kind of divergence that we had last year, particularly US growth superseding many G3 economies and leading to stronger dollar beginning to reverse as well. So, at least from a global perspective it does seem like a more favourable environment for India. Locally we have seen a lot of negative news come out, whether it is about the state election loss, whether it has been RBI governor resignation, whether it is about growth, whether it is about populism, I think these are the factors that have kind of been pushed out into the market already. So, I do think there has been a lot of negativity, it looks like things are starting to turn."

Saion Mukherjee said, "Consumption has been a theme for many years in India. We had seen significant re-rating in consumption stocks. So, as a sector we are underweight on consumption but there are pockets of rural consumption which is likely to do well and is already doing well. So, if you look at the commentary from many of the staple companies, in 2018 rural consumption overtook urban consumption and that could probably gain support further because of the kind of package which the government may announce. So, we have positive view on some of the sectors there which are linked to this. However consumption as a whole, staple as a whole we find the valuations quite high and have an underweight stance there."