Equity at LIC Mutual Fund, says that while valuations in the IT and pharma sectors are quite attractive, one should look at individual businesses separately.
Macro indicators are clearly turning positive. The expectation is that it will spur the investment cycle in the domestic economy going forward.
In the recent past, we saw business getting affected by demonetisation and the GST implementation. These are more relevant for domestic-oriented businesses. IT and pharmaceuticals have separate industry dynamics.
Being bottom-up investors, we think each company needs to be looked at separately. Individual businesses are going through different issues, positive as well as negative.
Earnings growth currently in certain names is below expectations. The concern in such cases should arise if we understand that causes are structural in nature or market expectation about the earnings growth is higher compared to fundamentals.
The latter is a case of several names, especially in small and midcap space. However, if the fundamental view remains strong, we will not be concerned about short-term earnings. Having said that, we will prefer to err on the side of caution.
