Dipen Sheth, Head – Research of HDFC Securities, makes no secret of the fact that he is extremely bullish about the NAMO government. In his report on NAMO stocks to buy for India 2.0. Dipen Sheth said poetically “The dark days of gloom, indecision & judicial activism are over. Get ready to welcome a recharged, transformed, aggressive India. Get Ready for India 2.0.”
The same theme is evident in Dipen Sheth’s latest interview where he confidently asserted that “This is the beginning of a multi-year structural bull run”.
Dipen Sheth pointed out that though nothing has changed on the ground in terms of macroeconomic or business environment, the rally is the anticipation of change that will play out over the next few months, quarters and years. This anticipation has driven the market sentiment and it is is actually the beginning of a multi-year structural bull run, he said.
Dipen explained that the result of the rally is that the beaten down sectors like Infra and PSU stocks are outperforming and that the traditional defensives like pharmaceuticals and IT would under-perform.
With specific reference to Pharma and IT stocks, Dipen emphasized that their under-performance was because of the appreciating rupee and the fact that mutual funds were pulling money out of them to invest in other sectors. However, the IT and pharmaceuticals are great businesses with multi-year potential he said. He pointed out that these are areas in which India has beaten the world, at least in the niche segments. “It’s been about 25 years since the IT boom started playing out in India, and there still is no sign of India losing its competitive edge any time soon. If anything, I am more gung ho on IT today than I was earlier” he added.
Dipen expalined that the same is true for pharma stocks as well. “The demand environment has improved. Also because capabilities of Indian pharmaceutical companies have jumped by leaps and bounds and there is an increasing realisation in the US that healthcare costs have to be managed, there is very good prospects for generic drug companies, especially those companies that are operating in niche areas, such as Sun Pharma and Dr Reddy’s” he said.
He added that investors should take the opportunity to buy great businesses like Infosys, Wipro or TCS and other well-known mid-cap stocks. He warned that there might be a short period of under-performance but that would be compensated by the huge gains that would accrue when the tide turned. “I would actually say that this gives you a chance to buy quality businesses should there be a panic sell in one or two counters. Given an opportunity, I would be gung ho on buying some of these high-quality names” he reiterated with great confidence in his voice.
I am continuing to buy Lupin and Alembhic plus Infy, HCL as well ..but as often happens with my buys, I continue to keep averaging and forever in the catch up mode. It takes a lot of guts to keep on doing it without knowing the bottom. Suppose, Rupee really appreciates to something like 55, I am screwed for 2 years