I don’t think it’s time to rotate out of quality or expensive stocks; those will continue to perform, said Sandeep Bhatia, head of cash equities-India, commodities and global markets at Macquarie Group.

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“The confidence in the broader economy is still very weak. There is going to be a miss on the fiscal deficit, the budget is on February 1, 2020. I think there are significant events that need to play out and confidence to be restored on the broader economy before we move out of quality. Therefore, I would advise investors to stick to the winners for the moment,” he said in an interview with CNBCTV18.

Therefore, the theme for the Indian market remains quality even if it is expensive, he said. “I think broader confidence in the global economy is still very weak. The focus is on geopolitics of this world and not on economics. So the geopolitical impact is that we don’t necessarily see a wider stock rallies but a narrow set of stocks which are much safer,” he stated.

On economy front, he said, “For an investor, the focus is always on securing capital and making a return on that. Te priority is also to have security of capital. For the last 2 years, we have been waiting for a broader economic revival. Unfortunately that has not happened and I wouldn’t say that a broad economic rebound is going to happen in the next 6 months.”

“I would want to wait for January-February-March period. There are pressures on the fiscal deficit. We could see some moment on GST, tax slabs for some categories. All and all, would prefer to stick to quality and especially, the high quality bank financials is where the money is to be made, at least if nothing else you will preserve your principal,” Bhatia added.

When asked about budget expectations, Bhatia said, regardless of what was expected and what was done, the fact is that we are going to miss the fiscal targets. “I don’t think there is any room to make any big tax changes in terms of raising taxes. Some of the things, which have been done, which have hurt investor confidence need to be relooked at."

"I cannot fathom right now what they can do or they will do. The only thing I will advise is – don’t make any big negative tax changes, and allow the economy to come back - it’s going to take at least 6-12 months, and also let some of the fisc go. We are seeing the fisc go close to 4 percent for the current year and it would remain in the same region next year too but allow that healing process to come through, otherwise we are just chasing our own tail,” he further added.

Stock specific, he said SBI is the only name he would bet on. "There are questions on the structure and final outcome of some of these PSU banks in terms of - if there are any mergers being proposed, the state of capital adequacy and new fund raisings. So in that scenario SBI has a lot of valuable subsidiaries; we will see the IPO listing of SBI Cards and that should be a good outcome for the bank.”

The house is also upbeat on TCS amongst the Tata Group but is a little cautious on Tata Motors. According to him, we could see a big volume push in autos in 2020 as inventory builds up. So, focus would be more on domestic auto names rather than global facing auto names, he added.