The anticipation of a quicker than expected pullback of stimulus by the Reserve Bank of India (RBI) has spooked markets, said Taher Badshah, CIO-Equities at Invesco Mutual Fund on Monday. The comments as Indian shares tanked amid renewed concerns over the Omicron variant of COVID-19 and its impact on the fragile recovery in the global economy. Both Sensex and Nifty fell sharply on broad selling with the benchmark 30-share BSE frontline index plunging 1,000 points, while the broader NSE Nifty50 also slumped well over 300 points in early trade.

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"Not all of it, the way the market thinks, is likely to pan out. In the short-term it looks a little overdone," Badshah told CNBC-TV18.

Despite the selling spree gripping the D-street, Badshah said that the Indian economy is in a relatively better position compared to global economies.

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“It is still a buy on dips market and we are basically looking for an economic recovery, which will probably strengthen during the course of the next couple of years as we come out, not just out of the downturn of the COVID-19, but even the meaningful downturn that the Indian economy has seen probably for 4-5 years prior to COVID as well,” he said.

On banks, he said that they are likely to be past of worst asset quality phase.

On stocks, Badshah said that the Indian equity market is still in buy on dips mode.

On specific sectoral plays, he said that largecap IT and pharma stocks can be the pockets to hide in, while also adding that he remains constructive on financial stocks.

“Domestic focused companies probably within which, along with IT, even things like pharma etc., might probably be a decent hiding spot in general, probably largecaps could probably do better than mid and smallcaps. So you are going to see some of those trends which generally accompany a risk-averse market or a risk-off market, as seen earlier,” Badshah said.

For the entire interview, watch the video

First Published:Dec 20, 2021 12:17 PM IST