Discretionary consumption space (includes branded apparels, footwear, restaurants, entertainment, media and tourism) is expected to see better growth in near to medium term as the consumer demographics are improving in India. Improvement disposable income (reflected in rising per-capita income) and rising aspirations are adding urban demand. On the other hand, the plugging of the leakage in subsidy payments due to direct benefit transfer (DBT) mechanism and better monsoons likely to support rural demand. The governments stated objective of doubling farm income and introducing more viable farm insurance schemes are positive structural trends for the rural sector.In the near term, the implementation of GST is adversely impacting the demand for many discretionary consumer products. However, we believe that the situation would normalize by second half of the current fiscal. Moreover, the organized players are likely to benefit from the shift in market share away from unorganized players (parallel economy) with implementation of GST regime. Thus, the recent weakness (if any) could be an opportunity to accumulate quality companies in the space. Preferred investment picks: Zee Entertainment, Arvind Ltd, Kewal Kiran Clothing, Wonderala Holiday

We maintain our “Neutral” stance on IT sector as the industry is in a transition phase, with shift in the spending pattern from legacy to digital technologies to realign business models. In addition, ongoing macro-economic issues and growing protectionism stance in developed economies continue to act as an overhang for the IT sector. To stay ahead of heated competition, Indian IT companies are increasingly focusing on investments in building digital capabilities, bridging the skilling gap, local hiring, entering into partnerships, setting up new delivery centres and opting inorganic routes for growth. Preferred investment picks: HCl Technologies, Persistent Systems

The Pharma sector has been under stress for some time now, with the incessant regulatory issues, pricing pressure due to increasing competition along with channel consolidation and appreciating rupee is going to be an additional challenge. We shall keenly monitor FDA remediation updates, key product approvals, management commentary and outlook along with USD/INR rates, as these would decide earnings upgrades/downgrades. Therefore, we advise caution. Currently, we do not have any preferred pick in the sector. We advise investors to wait for more clarity and a better entry point for fresh investment.