Pvt banks, IT, pharma have spring in the step: Dhananjay Sinha

Interest rate and currency movement will decide how markets are going to behave in the near future, Dhananjay Sinha, Emkay Global, told ETNow during an interaction.Edited excerpts:ET Now: What do you make of the markets? How has this week panned? What to watch out for, going ahead?Dhananjay Sinha: This quarter, we will have a very favourable base effect on growth because last quarter was a significant drop ahead of the GST implementation. That is one thing. The other thing is, of course, the momentum in the currency, the currency has been depreciating. That is something worrying the markets, especially from a currency standpoint.That has got a repercussion on the rate scenario as well. So, the 10-year yield has actually been moving up consistently over the past couple of weeks. That is another one. I would say global factors would be very critical. Strength of the dollar and inflation in the US are basically reinforcing the possibility of a rate hike by the Fed. All those things are there. From our market standpoint, there has been a rally in the benchmark index. With some of these developments, there might be certain flattening as far as momentum is concerned and we will have to see how it pans out.ET Now: Do you have any view on Bosch? I mean it is a stock which has surprised everyone by going up 20% in about four days?Dhananjay Sinha: Auto stocks as a sector have been doing pretty well in terms of momentum and that may be having a rub-off effect. This is cutting across two-wheelers and other vehicle categories. Possibly, there is a positive rub-off effect on all the auto ancillary companies as well. That is how I would place it actually. The full pack is actually doing phenomenally well.ET Now: Any picks for our viewers?Dhananjay Sinha: With the way the currency is behaving, we think that rates will harden. If you look at the G-sec yield curve, it has been moving up. The 10-year yield has moved up. The way it will have an impact on the banking sector is something we would want to highlight.Some of the rate sensitive banks, especially in the PSU space that have actually run up in recent weeks, can be somewhat vulnerable. Some of the private lenders that have good ALM (asset liability management) in a rising rate scenario can actually see spreads widening. So, for the private lenders that are traditionally considered as commercial banks, there has been a considerable amount of ramp-up in terms of the retail franchise. I would pick up some of the names there. The IT and pharma space will continue to see a good amount of traction with the rupee depreciating. That's something I would be positive on. The midcap space in the broader market has rebounded, in response to the new highs the benchmark indices have made. There might be some normalisation if volatility comes in. Broadly, I would say rate and currency movement will have an implication on the way markets are going to behave in the near future.

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