Research firm Nomura Holdings Inc. is bullish on select financial intermediaries in the Indian market and is cautious on the auto sector.
The government chose to stick to fiscal prudence for financial year 2019-20 instead of giving an expected stimulus. That has set the environment for lower cost of capital, and a gradual recovery of growth in the economy, said Saion Mukherjee, head (equity research) at Nomura India. “This gives an opportunity to build portfolio and look at select stocks with good amount of valuation comfort,” he told BloombergQuint.
These select stocks include financial intermediaries, which are the beneficiaries of lower cost of capital and stand to gain market share from those that are struggling, Mukherjee said. “It's a sweet spot for some of these financial intermediaries. In some of them, the valuations are not that expensive at this time.”
On the other hand, there is a possibility of disappointment in the auto sector earnings as the government's electric vehicle push stands to act as a short-term disruption, he said. “That won't be supportive of stock prices.”
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