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Centrum’s Chokkalingam Buys Banks, EID Parry After Rate Increase

Chokkalingam G., chief investment officer at Centrum Broking Pvt. Ltd., a Mumbai-based brokerage that also manages assets for individuals, comments on the outlook for India’s stock market.

The Bombay Stock Exchange Sensitive Index, or Sensex, lost as much as 1.5 percent today after the Reserve Bank of India lifted the repurchase rate to 7.25 percent from 6.75 percent. Only seven of 25 economists in a Bloomberg News survey had predicted the move, while the rest anticipated a quarter-point increase. Chokkalingam spoke in a phone interview:

“It is a relative shock to us, as we were expecting an increase of 25 basis points. The market always overreacts. The punishment is always more than what fundamentals deserve.”

On his investment strategy:

“We are increasing our positions in the banking sector a little, as they have corrected substantially today.

‘‘Industry growth has corrected slightly because of the high cost of funds. But definitely the banking industry doesn’t get an adverse effect from the change in rates. Most of the banks also have improved their non-performing assets. Still, the tendency of the market is that as if it is the end of the road.’’

Chokkalingam said they are buying stocks including Indian Bank; Lakshmi Vilas Bank Ltd. and EID Parry India Ltd., a fertilizer and sugar maker.

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