Nilesh Shah, Managing Director and CEO of Envision Capital, spoke to CNBC-TV18 about the current state of the market.

He said the big missing link in this rally is essentially earnings momentum,  barring a handful of private sector banks and consumption plays.

“The big event to watch out for is earnings in April,” he said.

Homes, hospitality and consumer appliance spaces look interesting, he said. However, consumer appliances space has seen some rally and so one should be cautious on them, added Shah.

With regards to auto space, he said the passenger car segment still looks stressed and going forward it could face challenges from better public transport and cab aggregators. “Auto ancillaries will do relatively better and another connected space to benefit from this would be private banks that lend to the auto space,” said Shah.

The rural theme is one of the strongest in the economy, he said, adding that it can be played through consumption. Rural is a secular opportunity with a combination of income transfers and loan waivers giving a boost to space, he said.

Source: money control

The market reaction on May 23 is reaffirmation of exit polls, said Nilesh Shah of Envision Capital in an interview to CNBC-TV18. However, he cautioned that now it will consolidate around current levels and some kind of profit booking will be seen.

The market turned flat with a positive bias after hitting all-time highs. Nifty climbed over 12,000 and the BSE Sensex crossed 40,000 intraday.

The Sensex gained 315.81 points at 39,426.02 and the Nifty rose 103.80 points to 11,841.70 at the time of publishing this copy.

Shah said there could be a similar situation like 2014 when Nifty hit 7,500 and then saw consolidation around 7,200-7,300 followed by a strong run.

Among sectors, he said consumer remains the favourite, which can be further broken into consumer staples and discretionary.

Financials continue to be a strong focus area including savings, insurance, distribution, etc., he added.

Nilesh Shah said direct proxy to the economy like engineering, materials have been underperforming for years and need to be watched closely.

One should keep powder dry and allocate some capital once measures are out, he added.

He said expectations are running high from the next government. “The priority area is to rationalise and bring down GST rates, physical infra, social infra, privatisation, etc.”

Bringing down the cost of capital or interest rate over the years could be the biggest contribution and can be done by the government, he added.

Source: money control