Good Long Term Opportunity in Pharma Sector

On the pharmaceutical space; what makes you so bullish?

When everyone was very positive on the consumption sector, more money is spent on consumption, including cars and many other products. Our view is that the same mega trend is applicable for healthcare, pharmaceuticals and diagnostics. With increased prosperity and the increase in the population of old people, is one of the big megatrends I can think of for the next 20-30 years. The advantage in this theme is that, over the last three years, it has not done well. So, you get a rare opportunity—a very good longterm megatrend along with underperformance in the last three years. This gives you a good entry point. 

What is your call on telecom?

You are more and more dependent on your mobile phones and tablets. So, our view is that you need not worry about the short-term pricing phenomenon you are seeing periodically, as long as you have a long-term view. In fact, it is more attractive than it was when the sector was doing well six months ago. We feel the sector is a big positive over the next three five years. The near-term is a clear competition-oriented problem, which is good and more positive for the long term.

On the mid-cap correction:

Despite the correction, we continue to think that midcaps are relatively overvalued compared to large-caps. The entire megatrend, which played out with the dip in commodity prices and falling interest rates, helped the midcaps and small-caps. Now that commodity prices and interests are going up, it will benefit the large-caps. We are still clear believers in this large-cap trade, over mid-cap stock and smallcap. 

Thoughts on PSU banks:

There are a few good PSU banks, which are not in PCA. I think many of them, their opportunities have substantially expanded because quite a number of public sector banks are not able to lend. So the few that are able to lend and which have capital to lend, I think the outlook for them is steadily improving.