Have fairly diversified portfolio: Dhiraj Sachdev

In a chat with ET Now, Dhiraj Sachdev, Sr VP & Fund Mgr-Equities, HSBC AM India, shares his views on market market environment.

ET Now: So what do you buy because what has really taken a beating has been IT and pharma do you buy those stocks now?

Dhiraj Sachdev: Well the portfolio has to be diversified and fairly balanced. It has to be a mix of IT, pharma, automobiles, agro chemicals, midcaps, selected capital good companies, not all of them.

IT, pharma cannot be ignored completely just because in the interim they have taken a pause and expectation that the currency might appreciate but then our estimate is that RBI will step in if there is a very fast appreciation of rupee because they have to build dollar reserves as well.

So IT, pharma obviously operate in a very sizable opportunity in the global context. They are very capital efficient businesses, most of them have zero debt balance sheets but the fact is that they are over owned in the last two years but most of these institution investors, most of the large cap IT pharma companies are quoting at 18 to 20 times price to earnings multiples plus.

So the mean diversion of other sectors have to come closer if not 20 times multiple of IT and pharma stocks but they have huge gap created in the last two years in terms of the valuations of other sectors vis-à-vis IT pharma. So we are seeing that mean diversion of other sectors is coming back in action and the portfolio has to be fairly diversified.