Pharma long-term bet; corrections good entry point for quality stocks: DSP Investment Managers

“We generally tend to remain buyers towards the lower end for good quality businesses. From that perspective, whatever little corrections we get, are good, we will look at good businesses to buy,” he said.

“Because of the huge liquidity coming out of retail, there is a little bit of that push which has happened in terms of the valuations. For any downdraft which makes the stocks look okay in terms of valuations, it will be a good point to buy,” he mentioned.

According to him, pharmaceutical sector generally is a good long-term bet. “India as a country has a good advantage in terms of being low cost, having good chemistry skills, we have skilled manpower and we have proven our dominance across geographies mainly in the US market, which is the larger market. Most pricing impact is in line or in sync with what is happening there in the generics market. The approval process for a few companies is slow right now and they are not able to launch new products which is hurting the overall momentum. To me, this is a factor of time, it is not so much a factor of quality of the companies and as these companies keep getting more approvals, they will come back in terms of the portfolio and things should be good overall,” he said.

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He believes that the US-focused pharma companies will have slightly more challenge in the near-term but the domestic-oriented companies are already doing well.

The way to look at the IT sector is the kind of growth prospects it is giving, he said. “The sector is giving visibility for the next one-two years and increasingly, the growth prospects are becoming stronger. I believe that the trend of good demand momentum is likely to sustain which is in a way going to mean that the valuations, which are looking on the higher side would sustain because generally the other metrics for these companies always remain good,” he shared.

On a relative scale, IT is trading at a higher range but it is rightly justified in the current market, Sambre mentioned.

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Auto sector has become a bit tricky right now, he said. “Given that there is a lot of talk about disruption, we are seeing some radical changes which are taking place in the electric vehicle (EV) two-wheeler side and all of that. So, I would say, generally because of these concerns, there is some amount of valuation topping out type of a risk which is there right now. I am having the expectation that over the next one-two years, the cycle should play out well for the auto original equipment manufacturers (OEMs) and they should recover back their normalised level of growth,” he explained.