MUMBAI: Its a good time to buy interest rate-sensitive stocks <http://economictimes.indiatimes.com/Good_time_to_buy_rate-sensitive_stocks/articleshow/4019376.cms#>, as rates are likely to decline, going forward, says Adrian Mowat, chief Asian and emerging market strategist, JP Morgan. He expects the repo rate at the rate at which RBI lends to banks<http://economictimes.indiatimes.com/Good_time_to_buy_rate-sensitive_stocks/articleshow/4019376.cms#> to go as low as 3.3% from 5.5% at present. One, buy rate sensitives and buy on bad news. Banks, property, insurance company shares have all come off sharply. Two, buy local consumer discretionarys (car and two-wheeler firms). Three, buy direct exposure to government spending, i.e., engineering and construction,said Mr Mowat in an informal chat with mediapersons.
However, the JP Morgan strategist cautioned that the aforementioned strategy would have to keep in mind certain market factors at play. He says unlike in the US, property prices have fallen by much in India. There are concerns about inventory pile-ups and accounting practices, he said. In construction and engineering sectors too, he sees stress points like contracts being put on hold, and in some cases, being renegotiated. On banks, he is of the view that asset quality will deteriorate as the economy<http://economictimes.indiatimes.com/Good_time_to_buy_rate-sensitive_stocks/articleshow/4019376.cms#>slows. One, however, needs to look beyond that,he adds. He recommends buying PSU banks, as government ownership is seen as a definite positive. JP Morgan recently upgraded its rating on India to neutral from underweight in January this year as macro headwinds from 2008 become tailwinds in 2009. Responding to queries if Satyam was a trigger, he said that decline in the market due to Satyam accounting malpractices was as an attractive buying opportunity. JP Morgan maintains that Indias 12-month forward PE premium relative to emerging markets has decreased from 77% in January 2008 to 4% currently. Consensus earnings growth expectations for 2008 are at 3% and for 2009 are 12.6%. The current expectations for 2009 EPS are still too high, in our view, but have been revised down 20% in the past 12 months, the latest JP Morgan report said. B.Karthick Research Analyst. --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Kences1" group. To post to this group, send email to [email protected] To unsubscribe from this group, send email to [email protected] For more options, visit this group at http://groups.google.com/group/kences1?hl=en -~----------~----~----~----~------~----~------~--~---
