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Market buoyancy at highest in last 12-13 months: V Srivatsa, UTI MF

A lot of value emerging in mid, smallcaps. A lot of buying has happened in these segments, says Srivatsa.

ET Now|
Mar 29, 2019, 04.33 PM IST
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V Srivatsa, UTI MF-1200
From an operational point of view, things are probably the best that you could have seen in the last three years, said V Srivatsa, EVP & Fund Manager-Equities, UTI MF, in an interview with ETNOW.

Edited excerpts:


Is the market likely to be a bit cautious, a bit jittery ahead of elections? How are you navigating the space?

The last one month’s rally has been a little bit of a surprise because our expectation was that before the election the markets will be sitting on the sidelines but clearly there is a change in the sentiment and investors seem more hopeful that the existing government will continue. Those indications are much stronger now than what it was a couple of months back. There has also been a lot of buying on the FII side over the last couple of months, specifically in the last one month which has propped up the market.

The other part is that market buoyancy has been probably at the highest that I have seen in last 12-13 months because there has been a much sharper rally in the mid and smallcaps. That also got to do with the fact that there was a lot of value emerging in the mid and smallcaps as it closed a couple of months back. Possibly, a lot of buying has happened in those segments.

Give us your view on the IT space. A couple of months back, you were quite bullish about the valuations. Are you still holding on to that stance?

Yes, we are still positive on IT. What has happened is that because of the buoyancy in the markets and the overall weakness in the dollar, the rupee has appreciated in the last 45 days which has caused some kind of weakness in IT.

There could be some level of earnings cut based on this because most of the market expectation hovered around 70-70.5, but having said that, the thesis of a very strong growth pipeline for next year still holds good.

This has also been validated by the fact that Accenture yesterday posted a very good set of numbers. Secondly, in terms of margins, there are levers because this is an operating leverage business and so your growth trends up. There are some benefits of operating leverage. Overall, we believe that IT is still attractively valued and the only risk remains the rupee risk.

If there is too much of a buoyancy in the current environment and the rupee appreciates significantly. that is the only risk I see. But from an operational point of view, things are probably the best that you could have seen in the last three years.

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