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Let us discuss the heavyweights that really have propelled the move as last week, we hit those record highs, topping the 22,400 mark. Can SBI and Reliance Industries Continue to work their magic?
Sanjiv Bhasin: It is a mixed bag. Who thought Tata Chemicals will rise 35% in four days and I think stock-specific, the index is getting propelled to a large extent by the underperformers. In HDFC Bank for that matter, like I told you, Rs 1350 may not be seen. It may consolidate, but it has consolidated for a long time.
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I think with yields falling, inflation falling. HDFC Bank could add more legs to the market. However, like we have seen, the midcaps are where there is a little bit of a pain point, and that could be a little bit of a laggard. But I still think in largecaps, one should look at the cement basket. If people are not aware, pet coke prices have fallen by almost 20% in the last month. So stocks like Ambuja, Adani twins are all raring to go. We think there is enough stock-specific movement. The index will take some more consolidation at these levels. You cannot have runaway rallies. We have rallied quite a bit, but the index is where there will be more money made than in the broader market.
Talking about DB Realty, let us get your thoughts in?
Sanjiv Bhasin: We have taken the other Mumbai player, Indiabulls Real Estate. We are very bullish on that. I think 16th or 24th is when the NCLT again meets to clear the demerger. It was slated for last month but because of less time, they could not get through the cases. Indiabulls Real Estate for me is the stock of the year given that they have one of the best inventories both in Maharashtra and Delhi. The Embassy will turn around this company. I would rather be with Indiabulls Real Estate than DB Realty. It has been a very strong move but I think Indiabulls Real Estate has just started a move.
For you, I guess you are sticking by your call amongst the oil and gas pack, ONGC?
Sanjiv Bhasin: Yes, ONGC and IOC stand out. We have had a profit booking bout on the city gas distribution. Over there, we still like IGL. There was too much apprehension on the present government’s embargo that they will convert everything into EVs. CNG is something which will continue parallel to what most people expect.
I think the type of distribution network IGL has started, aside from Delhi, the areas in Eastern UP and so on, they are making up very strong volumes there. In that, I would say IGL on any decline is a buy. Yes, the government may be capping up the extra profits which they have, and they have cut prices. But we think in your portfolio, ONGC should be your top pick and IOC on declines. The near-term volatility will see little impact on the stock. But this Rs 100 rupee cut on LPG means rural houses will be having more money to spend. So we continue to be very, very overweight on Bata and Patanjali or the whole basket of rural expenditure on staple discretionary, because those are where you will really see a good impact coming. After two-wheelers, we think rural incomes are now going to rise, and Bata, Patanjali are best poised to take advantage of that. As a disclosure, these stocks are under our coverage, maybe in our portfolio also.How are you tracking the performance of Zomato, given that we are also seeing a lot of competition now with some of the other players building up their quick services?
Sanjiv Bhasin: The stock has been on a dream run in the last one and a half years, it is up four times. And there has been exit of some of the longer-term private equity investors also, which again is momentarily. The stock is in a very huge uptrend and it is here to stay. If you see the valuation that Swiggy is getting, then Zomato still has a little bit of legs on the upside. But like I said, maybe now at Rs.160-180, there is no such fresh impetus to drive the stock higher.
We will want some change in earnings, some more guidance to take it higher. It will be over here at these prices. It has been an outperformer. Our top pick over there has been this and PB Fintech, which has outperformed and unfortunately, Paytm which has underperformed. But Zomato has been one of the stars and continues to be one of the outperformers.
Quite a few cases out there. Over the weekend, we heard that the regulator has barred JM Financial from the bond market and perhaps the IPO market as well. Then there are the cases of Paytm, IIFL Finance. Could this lead to some sort of sentimental damage within the small and midcaps specifically or not quite?
Sanjiv Bhasin: So firstly, I will excuse myself from speaking on that because we are part of the company or the groups which spoke about. But I would like to tell you the broader context. All these things are very, very good in the longer term because they help companies get back onto track on some small problems which may have been in the offing. The recourse or the course correction will be a very, very big positive. We cannot question the ability of the Reserve Bank because it has done in the bigger good of all investors.
I think you will have to take it with a pinch of salt for companies to do their course correction over a period of time. Like I said, in a bull market, you tend to ignore most of the negative news. That is why midcaps may be under a slight bit of pressure. Stock specific, I cannot make any comment.
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