Abhishek Basumallick says RBI rate cuts key for market rally, finds value in these 3 themes
The ace investor also expects significant buying by foreign and domestic institutional investors in the days ahead
- Aug 10, 2023,
- Updated Aug 10, 2023 1:23 PM IST
While retaining his bullish view on the domestic equity market, Kolkata-based investor Abhishek Basumallick said that significant buying by foreign and domestic institutional investors coupled with rate cuts by the Reserve Bank of India (RBI) will take the market to new highs going ahead.
He was speaking after the central bank’s Monetary Policy Committee (MPC) on Thursday kept the repo rate unchanged at 6.5 per cent for the third time in a row. The BSE Sensex traded 341 points, or 0.52 per cent, down at 65,655 in early trade.
So which sectors look attractive right now? In an interaction with Business Today, Basumallick, Chief Investment Adviser at Intelsense Capital, said, investors should zero in on pharmaceutical, capital goods and engineering and insurance sectors.
Sharing his view on the pharma sector, he said, “There is a need in the developed markets like the US, UK and others to reduce the cost of medicines as it is publicly funded. Indian pharma is the biggest beneficiary in this. The domestic market is also fairly strong. Pharma as a sector hasn’t performed well in the last couple of years because of the overhang of US FDA actions and also but most of the negative news is probably behind us.”
Data showed that the BSE Healthcare index has gained 22 per cent in the last one year. However, shares like Gland Pharma, Laurus Labs, Biocon, Ipca Labs and Divi’s Laboratories have declined somewhere between 5 per cent and 28 per cent during the same period. On the other hand, Marksans Pharma, Glenmark Pharma, Aurobindo Pharma, Lupin and Sun Pharma have surged between 25 per cent and 135 per cent during the same period.
Commenting on the capital goods and engineering sector, he added that they are seeing a very strong focus on infrastructure—both from the central and state governments. “Add to this additional private capital expenditure kicked off by PLI scheme implementation. Railways, rail stations, airports and highways are at the forefront. China+1 in manufacturing is likely to be a dominant theme in the future,” Basumallick said.
The BSE Capital Goods index has gained nearly 42 per cent in the last one year, while the 30-share Sensex has advanced 12 per cent during the same period. With a rally of 189 per cent since August 2022, Suzlon Energy emerged as the top gainer in the index. It was followed by Polycab India (up 93 per cent), Bharat Heavy Electricals (up 92 per cent) and Hindustan Aeronautics (up 76 per cent).
The market watcher also added that the worst for the insurance sector seems over. Both life and non-life insurance are seeing stable growth which can pick up in the latter half of the year. “The stocks have underperformed the market and are not on any investor’s radar at this time. One can consider insurance as a contra bet,” he said.
Shares of insurance behemoth Life Insurance Corporation of India have retreated 5.7 per cent in the last one year. Star Health and Allied Insurance Company also witnessed a drop of 9 per cent during the same period.
On the other hand, ICICI Prudential Life Insurance Company, SBI Life Insurance Company, ICICI Lombard General Insurance Company, HDFC Life Insurance Company and General Insurance Corporation of India have advanced 3.7 per cent, 6 per cent, 13.2 per cent, 19.3 per cent and 67.4 per cent, respectively.
While retaining his bullish view on the domestic equity market, Kolkata-based investor Abhishek Basumallick said that significant buying by foreign and domestic institutional investors coupled with rate cuts by the Reserve Bank of India (RBI) will take the market to new highs going ahead.
He was speaking after the central bank’s Monetary Policy Committee (MPC) on Thursday kept the repo rate unchanged at 6.5 per cent for the third time in a row. The BSE Sensex traded 341 points, or 0.52 per cent, down at 65,655 in early trade.
So which sectors look attractive right now? In an interaction with Business Today, Basumallick, Chief Investment Adviser at Intelsense Capital, said, investors should zero in on pharmaceutical, capital goods and engineering and insurance sectors.
Sharing his view on the pharma sector, he said, “There is a need in the developed markets like the US, UK and others to reduce the cost of medicines as it is publicly funded. Indian pharma is the biggest beneficiary in this. The domestic market is also fairly strong. Pharma as a sector hasn’t performed well in the last couple of years because of the overhang of US FDA actions and also but most of the negative news is probably behind us.”
Data showed that the BSE Healthcare index has gained 22 per cent in the last one year. However, shares like Gland Pharma, Laurus Labs, Biocon, Ipca Labs and Divi’s Laboratories have declined somewhere between 5 per cent and 28 per cent during the same period. On the other hand, Marksans Pharma, Glenmark Pharma, Aurobindo Pharma, Lupin and Sun Pharma have surged between 25 per cent and 135 per cent during the same period.
Commenting on the capital goods and engineering sector, he added that they are seeing a very strong focus on infrastructure—both from the central and state governments. “Add to this additional private capital expenditure kicked off by PLI scheme implementation. Railways, rail stations, airports and highways are at the forefront. China+1 in manufacturing is likely to be a dominant theme in the future,” Basumallick said.
The BSE Capital Goods index has gained nearly 42 per cent in the last one year, while the 30-share Sensex has advanced 12 per cent during the same period. With a rally of 189 per cent since August 2022, Suzlon Energy emerged as the top gainer in the index. It was followed by Polycab India (up 93 per cent), Bharat Heavy Electricals (up 92 per cent) and Hindustan Aeronautics (up 76 per cent).
The market watcher also added that the worst for the insurance sector seems over. Both life and non-life insurance are seeing stable growth which can pick up in the latter half of the year. “The stocks have underperformed the market and are not on any investor’s radar at this time. One can consider insurance as a contra bet,” he said.
Shares of insurance behemoth Life Insurance Corporation of India have retreated 5.7 per cent in the last one year. Star Health and Allied Insurance Company also witnessed a drop of 9 per cent during the same period.
On the other hand, ICICI Prudential Life Insurance Company, SBI Life Insurance Company, ICICI Lombard General Insurance Company, HDFC Life Insurance Company and General Insurance Corporation of India have advanced 3.7 per cent, 6 per cent, 13.2 per cent, 19.3 per cent and 67.4 per cent, respectively.