6/21/13 Prefer pharma over IT space: Lalit Nambiar, UTI Mutual Fund - The Economic Times

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Prefer pharma over IT space: Lalit Nambiar, UTI Mutual Fund

By ET Now | 21 Jun, 2013, 04.18PM IST Post a Com m ent

In an interview with ET Now, Lalit Nambiar, Senior Vice President and Fund Manager
(Equities), Head-Research, UTI Mutual Fund, shares his outlook for the market. Excerpts:

ET Now: After the massive hammering that the equities pretty much across the globe
got yesterday, today we are seeing some rebound when it comes to India. How
sustainable is it and do you think the market now has a bottom in place?

Lalit Nambiar: We have been talking about a sideways market for many months now and it is
partly driven by global volatility. You have central bankers printing money and then you have
announcements about what they would possibly do in terms of cutting back on that. So whether
it is the Bank of Japan talking about intervention and then the FOMC talking about possible
potential cuts in the liquidity in terms of stopping its purchase programme, it is actually just an ET SPECIAL: To download ET mobile app, call
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announcement which says that they would look at data and then they would consider what they
could do and they have given a timeline contingent on data. It basically shows that people have
leveraged positions and everybody is in a crowded trade in terms of positions they hold, everybody is moving to the emerging markets,
emerging market bonds. We saw what that meant for India, we saw FIIs selling Indian bonds. From May 22nd onwards, close to $5 billion of
Indian government debt has been sold which had its impact on the Indian rupee and all other countries where the current account deficit was in
a vulnerable situation. So overall, it is a little bit overdone maybe in the short term, but the volatility is not going to go away. It is going to be
there and one needs to hold on to companies and stocks which have solid businesses rather than look at macro flows coming in and going out.

ET Now: But what is your sense then? You spoke about the fact that the volatility is here to stay. Do you get the feeling that we
are likely to stay in this ranged zone up until 2014 till we get more clarity on the big political trigger of which is general elections in
2014? Is there any event that you foresee in the next six to eight months which could change track for our markets one way or
the other?

Lalit Nambiar: Domestically we need to see some action from the government. It is talking about a programme, about significant reform,
about how the recent events will probably kick-start one more wave of reform, but we need to see more action and that would be the biggest
factor which the markets could look at and take cognisance of in terms of a positive move. Otherwise as like you said, it is run up to the
elections and people do not expect much to happen. So that is a concern and the markets could be lacklustre.

economictimes.indiatimes.com/opinion/interviews/prefer-pharma-over-it-space-lalit-nambiar-uti-mutual-fund/articleshow/20699728.cms?prtpage=1 1/2
6/21/13 Prefer pharma over IT space: Lalit Nambiar, UTI Mutual Fund - The Economic Times

ET Now: What is the approach now to some of the current sensitive sectors, namely IT, a couple of pharma exporters and more
importantly OMCs?

Lalit Nambiar: Let us cut it up. In terms of IT, there are serious business issues. Until the Immigration Bill issue is sorted out, it would be too
early and premature to jump on the currency factor. Besides it is early days, the problem with the currency is that it is not that it is depreciating.
The issue is that it is volatile and a structural depreciation is valid because we have a current account deficit issue, but looks like it could easily
see some kind of recovery in sometime and that is again a pain factor for corporates. So it is not such an easy thing that the rupee is
depreciating by all exporters. We prefer pharma at this current juncture. They have open positions. The business is steady. You know that the
kind of competitive activity which can happen against IT is not likely to happen in pharma. So I prefer pharma over IT and as far as OMCs are
concerned, it is a very complicated structure there with the government in the picture and the government's own biases and requirements
coming to the fore. So it is a difficult call, a higher risk call. So in those three, we would probably prefer pharma.

ET Now: What about the power space? Just today we had the CCEA allow companies to pass on the costs of imported coal. It is
a reform that the power producers have been seeking for a while now. Slowly but surely, the reform momentum is building up in
this particular sector. Do you think it is time to start looking at some strong power stocks as well or do you think there is still too
much of policy uncertainty in the sector?

Lalit Nambiar: The announcement is a good thing, but people will want to wait and watch the space before they can really act. They would
want much more concrete measures coming in in different parts of the sector and not just maybe one announcement. So that has been a
problem. We have had announcements in the past too, but something or other holds up the entire picture. So people will want to wait on that
one.

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