We believe PSUs, infrastructure, power, pharma, banks, FMCG, auto, and telecom would find favour among investors in 2009. Investors could resort to PSU companies for safety ignoring their weakness on parameters such as capital efficiency and lower return ratios.

In addition, infrastructure and associated sectors would be the direct beneficiary of the government’s stimulus package, which benefits banks as they act as canalising agents for investment. We prefer defensive domestic plays like pharma, FMCG and select auto companies as a sharp plunge in commodity prices would cushion them against margin pressures.

Pankaj Pandey, Head of Research, ICICI Securities

Reported profits for the Q4 of 2008 and Q1 of 2009 will disappoint, especially in industrial, commodity, realty and technology sectors. We expect risk aversion to remain, moving money from these sectors to defensives with predictable earnings such as consumer and utilities. Banks may also be treated as proxies to government bonds, but the implications for them of a deteriorating business environment will have to be borne in mind.

From Outlook 2009, Sundaram BNP Paribas Mutual

We like companies/sectors catering to domestic demand specifically those geared towards rural consumers or interest rate sensitives. Therefore, we like consumer staples and telecom companies which will benefit as the large consumption potential of rural India plays out.

The sectors that we favour also include banks and autos (particularly passenger vehicles) as key cyclical picks. In addition, in the infrastructure space power generation companies and related equipment manufacturers look attractive given the ongoing government supported capex in the sector.

As independent themes we also prefer private sector upstream oil & gas companies on account of their attractive exploration potential. PSU oil companies are also likely to stand out should the government’s intent to allow their product pricing to become more flexible materialize. We are less inclined towards export oriented or commodity businesses as they are likely to witness pressure due to global headwinds.

A. Balasubramanian, CIO, Birla Sun Life Mutual Fund

There is a 3Cs theme reflected in our holdings: commodities, consumers and convergence. Continued economic growth in emerging markets seems likely to support demand for commodities. We have also seen some commodity related stocks decline well below their intrinsic worth during 2008. Sectors geared toward direct consumption could benefit from rising levels of disposable income within emerging markets. We also expect convergence within regions to continue providing favourable conditions for companies doing business there.

Mark Mobius, Executive Chairman, Templeton Asset Managment

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