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Should one anticipate anything big bang announcements today?
Sandip Sabharwal: I do not think they can announce anything because this is an interim budget but I guess there will be a lot of statements of intent that if we come back we will do X, Y, Z.Vision statement sort to speak.
Sandip Sabharwal: Yes, and there could be some specifics also related to what they will do on taxes etc. They would not do anything but they will say that we will do this so I think those will be the things. The good part is that the fiscal deficit figures which came out yesterday till December, look pretty strong. That gives a lot of levy for the government both on what they are doing on the social side in terms of the freebies they are distributing as well as investing on the capex side. So economically, we are well placed.
Ever since the Finance Minister Nirmala Sitharaman took over in 2019 year after year we have been seeing an increase in the demat accounts as well and in December alone a 139 million being added. Do you think that just that thrust or enthusiasm from a lot of new investors is a stamp of approval of just a long term bullish stance for the markets?
Sandip Sabharwal: Yes, it is, but there are two parts to it. One, large number of IPOs lead to lot of new investors coming in who would not usually invest in the stock markets but just for that IPO allotment they have opened the demat account so that is one part of it.
Second, the more a trend sustains, the more is the confidence that it will go on and that is what is feeding on the minds of the investors these days because the move has sustained for so long that people believe that it should do well and to that extent it is good. The good part also is that a lot of new investors, a small amount of money are not directly coming into equities. It is going through mutual funds etc. which gives a lot of sustainability to the equity flows.
In the very near term what is the market construct looking like because it is a little puzzling? Largecaps are doing their own thing with Nifty Bank in a completely different trajectory and then smallcaps continue to make a record high on a daily basis?
Sandip Sabharwal: I do not track the smallcap index so much. The midcap index is up 25% in the last three months itself. Such frenzied moves will typically lead to phases of consolidation correction.
It will happen so I thought it should happen in January. Starting January, it did not happen but eventually it will and there will be corrections which will give more opportunities for investors to come in. And there is a lot of volatility also, the one day down, one day up kind of moves which also reflects very disparate views.
Today one set of people are very bullish and one set are cautious and I think that is getting reflected in the markets today. So my guess is that we should seek some consolidation, some correction globally, which will lead to a correction in India also I guess. So that should happen and especially if we have tracked the largecap results, across the board most of the largecap companies have corrected post results except for some auto and pharma stocks.
Any stocks that you are betting on? Anything that you may have bought in the recent bit of a shake off in the market?
Sandip Sabharwal: So we have been buying into stocks like Voltas or stocks like Bata expecting. So my essential idea is to look at companies which have got strong brands but which have got down, battered down because of some reason or the other which are not long-term sustainable. So Voltas has already moved and is at Rs 1,100. I do not think we should be buying now. We should wait for it to consolidate. Bata results are today, so we will see. I was encouraged by the commentary of the management and the take-up of the executive role again by Dilip Piramal’s daughter in VIP Industries. That is one stock which has been one of the worst underperformers in terms of a branded, well-recognised stock on the midcap side. That is a good turnaround candidate at 530-540. So I would think that if the turnaround plays out the way I think it will over the next one or two years the stock could do..
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