Global risk aversion is coming; Sensex may drift lower : Devendra Joshi, Equity Strategist - Asia Pacific, HSBC
Updated on: 09 Jun 2016
Indian shares have priced in a lot of good news and have now started looking a bit expensive, says Devendra Joshi, Equity Strategist - Asia Pacific, HSBC.
HSBC upgraded India shares to neutral recently but at 27,000, the Sensex is already ahead of the brokerage's 2016 target of 26,000.
"Over the next few weeks, there may several events [that may be negative for equities]," Joshi said. "There is the Fed rate hike, developments in European politics, China slowdown. We may see global risk aversion going forward."
He added that investors should position themselves in sectors where possibility of disappointment in earnings is the least. HSBC is positive on consumer staples, IT and utilities and underweight on financials (except private banks), materials and telecom.
Below is the verbatim transcript of Devendra Joshi's interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: What have you made of this sudden rally that we saw from sub-8,000 levels or even more than 8,000 levels to almost 8,300? Is there discomfort in buying at these levels?
A: There have been some signs of growth and some positive signs that we saw over the last one month to a month and a half in terms of earnings, in terms of high frequency data. That gave some sort of confidence to investors but at these levels, market does look a little expensive and the earnings expectations are also high. So, there are positive signs but they seem to be priced in at the moment.
Sonia: I was going through your note and you have upgraded India to a neutral but your 2016 Sensex target is 26,000 and we have already surpassed that with ease. What do you see as the way forward now? Do you think that we could sort of grind around or consolidate around this 27,000 zone on the Sensex or do you think that because of the improvement in earnings, because of global cues stabilising, we could perhaps see better levels by the end of the year?