Sonam Udasi, Head of Research, Prime Securities is bullish on companies that are ancillary to oil and gas like Aban Offshore and GE Shipping. He told CNBC-TV18 that those stocks are expected to report good earnings. He is also bullish on logistics, the telecom space and the media space.

Excerpts from CNBC-TV18’s exclusive interview with Sonam Udasi:

Q: How are you approaching the markets at this juncture? Markets are not giving way despite the negative news coming on crude and inflation. Do you think there are not too many problems with the market and at what levels are you a net buyer?

A: Much of the news on inflation, crude and commodities is already in the market for almost a month or even more than that. The market has stomached that news and we see a maximum of 5% fall here or there.

With respect to the negativism on the inflation side, even the RBI Governor said that it will peter out over the next two months and he is positive on that.

The next quarter earnings will be the driver for further momentum. Right now, you are still seeing some buying or selling in specific stocks wherever people are finding value whether it is midcap or largecap.

Q: What would be the sector picks at this juncture, when the markets are losing ground and there may be buying opportunities? What are your sector/stock picks?

A: Companies that are ancillary to oil and gas, whether it is Aban Offshore or GE Shipping, are looking good and earnings will be very good for those stocks. We are very bullish on logistics and on the telecom space. We are also very bullish on the media space and its sectoral growth is very good. So, whether it is content distribution or production, we are very bullish on those companies.

Q: What is your sense on the range over the next 3-4 months? We are going into a relatively low newsflow period. Are we going to consolidate in a bit of a range or go from week-to-week tracking inflation and crude oil? Will we just stay in a small range or are we in some sort of a trend?

A: Most reports are out on crude and they have a very negative view from a longer-term perspective on crude. Being a net importer, I don’t think that is going to impact the larger sentiment or the bull run; it’s going to be impacted more by what the earnings delivers, how geared are companies and whether they are able to meet their debt equity requirements. So, that should drive the momentum.

Q: Where do you stand on IT stocks? We have seen some fairly severe reverses for the rupee. Where do you stand on banking stocks? They have been losing more than anyone else because of inflation.

A: IT companies and most of the companies we have, have a hold rating currently. Despite a favourable rupee, on the longer-term, the rupee has to get stronger against the dollar and that is a negative for the sector. There are enough buying opportunities apart from IT to look at.  So, the risk reward is more favourable in other sectors.

With respect to banking, if I were an investor and have a two-year horizon, I will look at the largecap banks and ICICI Bank. They don’t have shorter-term nuances. In the longer-term, the story continues to be very good on the credit side.    

Q: What are your two investment picks and your disclosure?

A: We are very bullish on logistics. We are bullish on Bharti and the offshore space.