4 pharma stocks CA Rudramurthy is bullish on for near term

"Nifty will be in a broad range of around 22,000 to 23,000 and the upside is definitely capped for some time. And when it comes to Bank Nifty, yes, the high around 50,000 will be acting as a very stiff resistance and unless we close decisively above 50,000 and on Nifty above 23,000 every rise will be sold into for very short term," says CA Rudramurthy BV, MD, Vachana Investments.

Let us start with the view in terms of the benchmark indices. What is it that you are expecting over there and this election volatility, maybe that could continue this week, but how do you see from next week onwards what is it that you are seeing?
See, the structure of market has definitely changed because of the political verdict. And also, valuation was definitely a concern even before the exit polls and post the exit polls where most of them gave NDA a thumping victory and that big majority made markets to further go up on Monday and after that we have seen the correction post the real verdict.

Now, for me, Nifty will be in a broad range of around 22,000 to 23,000 and the upside is definitely capped for some time. And when it comes to Bank Nifty, yes, the high around 50,000 will be acting as a very stiff resistance and unless we close decisively above 50,000 and on Nifty above 23,000 every rise will be sold into for very short term.

But, however, medium to longer time frame, India shining story is still on and one has to be very stock-specific and sector-specific in this market and especially for new investors or people who are new into market, I would advocate them to wait out for another one week.


Right now, one has to be in a wait-and-watch mode, watching this broad range of around 22,000 to 23,000 on Nifty and Bank Nifty at around 47,000 to 50,000 but for very short term, yes, market will see selloff on every rise.

In terms of that when you talk about the Nifty FMCG because it is expected that the social spending side, the consumption side, that is something expected to see an increase. What is the view on Nifty FMCG and anything that you would be picking up in that basket?
In fact, FMCG, pharma, IT, these are sectors which will do definitely good and also, if there is focus on, let us say, rural development, rural financing, these are things which will do good. Also, I was so, so bullish on public sector, PSU stocks, and in fact, they have given a fabulous rally if you see for the last one and a half, two years and in fact, I was calling it out as a decadal rally is what you will see in these stocks.

And right now, after the verdict, I am definitely making the necessary changes. Yes, this is the time to book profits on stocks where you have seen already a big run-up and now valuation will definitely be a concern and especially the PSU stocks like whether it comes from your RECs, PFCs, BHEL, BEL all these stocks, so these are stocks which might see for some short-term correction and fresh buying definitely at these levels not advocated and if someone has this, kindly book some profits at this level and you have to make the changes in themes as the market makes the necessary change.

So, for me, right now, if I have to pick some sectors and keeping in mind the changes which are happening both politically as well as in global front, I will be looking at IT, I will be looking at metals, I will be looking at FMCG and I will be looking at themes which are rural theme and these are sectors which broadly one can focus upon.

And if I have to move to stocks specific in these sectors, for example, if I have to pick up for rural theme, if I have to pick up from FMCG, yes, no doubt Hindustan Unilever looks very-very strong to me.

Look at even stocks like Dabur, look at stocks like Colgate, ITC. So, these are stocks which can definitely do good. And if I have to pick from metal, yes, look at stocks like Tata Steel, look at Hindalco, Jindal Steel.

Yes, these themes can do very good and if I have to pick up stocks from even the private related themes and rural theme, yes, one can even look at specifically Bandhan Bank which looks good for me at current level.

Rural financing will definitely get a push up. At these levels Bandhan looks very good to me. Yes, at around 190, 192, the downside is very limited and one can look at targets of around 220, 230 to come and I am even keen on some of the financial names like L&T Finance which also looks very good.

At current levels of around 157, 158, L&T Finance looks good. If I have to pick from pharma, yes, you have very good names there. I like Biocon. I like Zydus Life. I like Sun Pharma. I like Dr Reddy’s. So, these are a few of the pharma theme and stock specific calls which I like. But definitely, yes, one has to stay away from PSUs right now and if you are forcing to buy something in PSU, stay with PSU banks, stay with even the oil marketing companies might be your BPCL or if you have to stay with PSU banks, it will be on dips buy SBI.

So, you have to be very choosy when it comes to PSU, there I will only stick with PSU bank like SBI or oil marketing company like BPCL, HPCL and one has to book profits on the other side of the PSU which has given already a big rally.