Nirmal Bang's Rahul Arora bets big on pharma stocks

If Rahul Arora, CEO at Nirmal Bang Institutional Equities, makes a portfolio for the next year, pharma, cement, auto and auto ancillaries and banks are where the bulk of his allocation would be, he told CNBC-TV18 while discussing the stocks and the sectors he would bet on.

“Within that, at least a third to 40 percent of my exposure would be in pharma,” he said adding, "and then the remaining 60 percent would be divided equally amongst other sectors."

Amidst pharma stocks, Arora prefers Sun Pharma and Cipla. “Sun has got a good blend of both US as well as India, so that would be one name that we would definitely play. The other would be Cipla,” he said.

He will stay away from export-related stocks including IT. “It will probably be more domestic and our pecking order sector-wise will probably be pharma as one, cement as two, auto and auto ancillaries as three and banks as four,” he said.

This is going to be a tough year for markets – Diwali to Diwali. “It is going to be very tough to make money. We are going to be heading into a slowdown, in some cases even a recessionary environment,” he said.

With the ease with which money has been made from 7,500 on the Nifty to 18,500 on the Nifty, stock picking is going to be extremely critical. One will have to be very selective.

He believes cement is a very big play because government spending on infrastructure projects is going to be quite material. So as a second-order beneficiary, cement will end up doing pretty well.

He is relatively positive about commercial vehicles (CVs). “We will probably play Ashok Leyland from the OEMs. As a proxy I would probably look at Jamna Auto,” he mentioned.

TVS Motors has delivered better than the other two peers. The company has been ahead of the game in premiumisation and EVs. “From a preference standpoint, Hero MotoCorp would probably be a slightly more value-additive pick for us because of the valuation comfort and the cash on books. The dividend yield on Hero is also reasonably good,” he explained.