Avoid India Realty, Metal Stocks Amid Rising Rates, Peerless Say

Kaushik Dani, a Mumbai-based fund manager at Peerless Mutual Fund, which has 49 billion rupees in assets, comments on the outlook for Indian stocks. Dani spoke in a phone interview.

On market outlook:

“Global concerns are still there, which continue to affect markets. A major concern is the high inflation rate, which is not softening. Credit options are also slowing down. Everyone is eyeing the U.S. jobs data to come out today, to see how markets will go.” 

On interest rates:

“There is a general consensus of a 25-basis point rise in interest rates on Sept. 16. The most important thing to watch out for is the monthly inflation data, which is out before the policy is announced. Inflation is not decreasing month-on-month and if comes on the higher side, it will show things in the economy are not improving.”

The central bank has raised its repurchase rate 11 times since the start of 2010 and last increased it by 50 basis points on July 26 to 8 percent to damp living costs that are rising the fastest among the so-called BRICS nations.

On investment strategy:

“For the past couple of quarters, we have been focusing on non-interest rate sensitive sectors, like consumer goods, health-care and select technology stocks. We also like a few automobile stocks. Investors should avoid high rate-sensitive sectors, where leverage is high, such as realty, metals and power-generation.”

Source: http://www.bloomberg.com/news/2011-09-08/avoid-india-realty-metal-stocks-amid-rising-rates-peerless-say.html