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Ashmore’S Ashwini Agarwal Cautious On Markets, Advises Playing Real Estate Through Proxies

Stellar week for the bulls, to decode this stellar rally CNBC-TV18 spoke to Ashwini Agarwal, Co-founder & Partner, Ashmore Invst India. Also little later Jai Bala of Cashthechaos will talk about the technicals for next week.

The BSE Sensex made history on Friday by reaching the 60,000-mark for the first time ever as investors continued to accumulate banking, finance and auto stocks despite lacklustre global cues and concerns over frothy valuations. 

The 30-share benchmark rose 163.11 points or 0.27 percent to its lifetime closing high of 60,048.47. Intra-day, it touched an all-time peak of 60,333. Similarly, the NSE Nifty advanced 30.25 points or 0.17 percent to close at a record 17,853.20. It soared to a lifetime high of 17,947.65 during the day.

To decode this stellar rally CNBC-TV18 spoke to Ashwini Agarwal, co-founder and partner, Ashmore Investment Management India.  On the other hand, Jai Bala of Cashthechaos also talked about the technicals for next week.

On markets, Agarwal said, “Obviously not a time to be taking a lot of risks is at least our view, trying to play a little bit more cautiously than completely be in a bullish frame of mind at this point in time.” He added that the market has been climbing a wall of worry for one and a half years now and at every point participants have felt a little cautious that things are getting overstretched, markets are being expensive, the domestic economy is doing extremely well, the government’s policy support and those are the kinds of mitigating factors.  

“So, it is kind of glass half full or half empty depends on who you are. My sense is that there are sections in the market which are getting a little lower price and that is where we are,” he said.

On real estate stocks, Agarwal said looking at any bull market rally in the last few decades has led to an upside in demand for real estate. People make money in the stock market and they want to upgrade their lifestyle, he said, adding that the IT sector is doing extremely well, wages are increasing so the young IT professionals have to spend their money somewhere so it is going to be homes, it is going to be cars, and so on and so forth. He, therefore, thinks the demand conditions for real estate are extremely benign.

“Buying stocks of real estate companies is a slightly different matter in our view. I think a lot of stocks are already reflecting significant gains into their business in the next few years. So we would rather play it through proxy companies such as building materials, tiles, laminate, and so on and so forth. Not sure that we want to play directly through real estate companies. But yes, the sector will do well from a demand perspective there is no doubt,” he said. 

Meanwhile, talking about IT stocks Jai Bala said, “The frontline stocks are showing signs of exhaustion and we have identified three stocks in late May-early JuneHCL Tech and two L&T, They have been on a tear, but HCL Tech has still got some strength. However, L&T names are now showing some signs of exhaustion.” 

He, however, added that there is rotation going in the IT sector, particularly in the technology-based education stocks and NIIT Limited, Aptech, and Career Point. “Career Point might be at a low-risk reward potential as long as Rs 150 is maintaining for the stock I think it is heading for a good breakout there,” he said.

For the full interview, watch the accompanying video…

(Edited by : Kanishka Sarkar)

First Published:  IST

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