'Indian market is becoming attractive but ...': Arun Kejriwal's advice for 'smart' investors

Market expert Arun Kejriwal said the Indian market is becoming attractive in terms of valuations but not across the board as only the large-cap space seems to have come in a zone where one could be buying happening sooner than later. "I'm not suggesting that you go and buy the market tomorrow. But, at some point of time the advantage that India's economy offers will be visible to the world in the longer run. Smarter investors will start looking at India at least in the large-cap segment," he told Business Today on Tuesday.

The market veteran finds the pharma sector to be in a "sweet spot" at present. "India is a large player in the pharma space. We are exporting primarily generic drugs. For generic drugs, there is a higher duty imposed which is to be borne by the consumer, not the manufacturer," he stated.

In addition, Kejriwal underscored that the banking sector is also in good shape. "That's another area where you should be looking for comfort. There are some large-cap stocks which can be looked at. The Nifty composition of the BFSI space is close to 43 per cent. If you have a meaningful move happening on Nifty, it can't happen without the BFSI participation. Within banking, one can also look at the housing finance segment," the market specialist said.

When asked about the mid- and small-caps, he said, "These are typically high-risk and high-return items. But when the chips are down, you need to move to safety, which only the large caps can offer. It's now a question of rebuilding your portfolio after witnessing a strong rally over the last four-and-a-half years and a sharp correction over the last four to five months. In such a scenario, you have to make some tough decisions about what you've been holding in the mid-, small- and micro-cap segments and decide whether you've bought those stocks as fundamental or as momentum plays. If you've bought them as fundamental plays, I suggest you can still continue to hold because, at some point of time, good value will always get recognition back again even after a fall. If you have got stuck into momentum plays, nobody can help you even when the market rallies. It is a new set of stocks that become momentum plays every time there is a momentum rally. Old ones normally never come back into reckoning."

In response to a query on the PSU space, Kejriwal said, "Within the PSU theme, there have been three segments: Defence, railways and power. This is where I believe the bulk of retail money or new investors just put in their money and purchased shares. Some of these stocks went up to 7x in a span of three-and-a-half years. They came to levels which were ridiculous under all circumstances."

He also mentioned that there could still be some pain left in these counters.