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Sanjiv Bhasin, Director, IIFL Securities, says “Ashok Leyland, Maruti and Bajaj Auto along with Motherson Sumi would be four good picks to make money in the near-to-long term. On the other hand, in most of the other stocks, particularly Mahindra & Mahindra and the others, we have taken some chips off the block as it hits new highs, that has been a huge outperformer in our portfolio.”

Bhasin further says: “When there is extreme greed, take some money off the table and extreme fear again gives you an entry opportunity. So, IOC, NALCO, ONGC, HPCL are the buys in this correction. “


Let us start by talking about Reliance and Disney and the definitive agreement they have signed. Yesterday overall in terms of a trade, Reliance was quite weakish and saw a very sharp fall. What is your view on this now?
Sanjiv Bhasin: It is a win-win deal at least for Reliance which is stepping up as far as media is considered and Disney now becomes a very key component of its media plans and sports channel, especially after the Zee-Sony deal got busted. This is a win-win situation. They have committed big capital and Walt Disney is a $200-billion company. Media in India is one of the most under-owned and underestimated as far as earnings go and there is a long way forward. Reliance always invests with a long-term view and this would be a positive on the structural side. It is a foray into media in the global context and is gaining even more traction in the Indian context. So, it is a thumbs up. On the Reliance stock performance, yesterday we saw a selloff because of inherent reasons of midcaps being overbought semi-stipulation. These are all the causes and reasons.

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There was froth in midcaps and we saw some sort of expiry-related pressure on derivatives. But that is part and parcel after having seen such a big run. For me now, Reliance and HDFC Bank should be the main pillars of the index and the rest of the midcaps can continue to be consolidating for some time.

What is the outlook then when it comes to the entire auto space, eye on the February auto sales and we are expecting that maybe for the CV sector, the pre-election order slowdown will hurt volumes?
Sanjiv Bhasin: A large part of that is already in the price. In the CV space, we still like Ashok Leyland as our top pick, Maruti in the four-wheeler space and we continue to be overweight on Bajaj Auto. Now, as far as performance goes, you will have to see that the stock prices have already depicted the best of the auto sales.

Look at some of the OEMs which are starting to perform. One stock which I have been recommending all the way from 65, 70, 90 is Motherson Sumi. That is in a very sweet spot because globally their overall reach in different places has played out very well. So, you have to be selective in the stocks which you buy. As a disclosure, Ashok Leyland remains our top pick. It is getting more market share in the CV market from Tata Motor. The bus market is doing excellent and overall, their new entrants, particularly the DOST model which is an ICV that is doing very-very well.

So, Ashok Leyland, Maruti and Bajaj Auto along with Motherson Sumi would be four good picks to make money in the near-to-long term. On the other hand, in most of the other stocks, particularly Mahindra & Mahindra and the others, we have taken some chips off the block as it hits new highs, that has been a huge outperformer in our portfolio.

You were talking about the froth that we are seeing within the broader universe. Is yesterday’s move, the SEBI MF norms spooking the market, all of that leading up to more carnage within the broader universe? What is the sense that you are getting?
Sanjiv Bhasin: Well, corrections are always uncalled for, but they separate the men from the boys and it was much needed. Everyday people were making money on midcaps, rightly or wrongly, there is money coming into that. Maybe SEBI sounded a word of caution that entry is easy, exit sometimes becomes difficult because of liquidity. But that is part and parcel of the market.

There was the US inflation data and maybe 22,000 was a sticky number staying above that. We still think the broader market is where the money is. Read my lips: It is going to be private banks that will lead the market higher and one should be in marquee names. Midcaps are something where we have been telling people to take off some chips. But now when we get this correction, utilise the right part to get into OMCs. From Rs 600, HPCL is at Rs 500, from Rs 195, IOC is at Rs 167. ONGC has still not corrected from Rs 280.

That is a place to watch out because PSUs will give an opportunity out of extreme greed and fear. When there is extreme greed, take some money off the table and extreme fear again gives you an entry opportunity. So, IOC, NALCO, ONGC, HPCL are the buys in this correction. Today being expiry, the second half could surprise on the upside because it is more of retail liquidation. I expect to see much more traction on largecaps in the first week of March. However, I continue to feel that the second half of March may be a little tricky, so we will have to bear with volatility being part of the market for the next fortnight.

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