Excerpts from an interview:
Q: What’s your sense of what the RBI may do and how the stock market is positioned before that event?
A: There are no compelling reasons for it just because somebody else has done it and there is an interest rate differential which has gone up. Having said that if one looks at some of the negatives, which are still continuing, which is the money supply growth is still at more than 23%. If one looks the credit growth has decelerated but it is still in the higher 20’s. I don’t see a compelling reason to reduce at this point in time, particularly when there is inflationary pressure from the oil side not getting factored into. Having said that if one looks at the market at 18,200, I think we have very much bounced back to a level which again makes it slightly overvalued and as we have mentioned time and again that this is a level, which doesn’t makes a fresh entry level to get into stocks.My sense will be settling somewhere around 17,000 levels which will be more comfortable. The market has gone ahead on the basis of US Fed reducing 75 bps and in anticipation that India will also reduce it but I think the market may have a disappointment from that perspective.
Q: Which of these rate sensitives makes the most sense to you banks, real estate or autos?
A: Infact banking is fundamentally looking very attractive. If some amount of reduction happens in interest rates by RBI or even otherwise because of market forces. I think banks stand to gain maximum. Then you have autos to a large extent, however we have already seen them shedding quite a bit and now slightly recovering from the lows. Real estate still valuation wise doesn’t offer very high numbers from the current levels. There are other secondary sectors, like cements to some extent, which is driven by these things, and auto ancillary to that extent and they will also probably start gaining little bit.
Q: Would you buy anything from the autos now?
A: Stocks like M&M and Maruti still provide some upside purely from fundamentals and valuations not getting carried away by the recent upside. I am still skeptical on the two-wheelers but there are opportunities in the auto ancillary and we are observing that the margin pressure, which was there, is now easing to some extent and so that is another space to look at.
Q: How would look at fertilizers as a sector, its corrected quite sharply most stocks are down more than 50%, is there an opportunity there or not quite?
A: The way it has gone up, I don’t think the fundamentals were the main reason behind it and so fundamentally I don’t see any strength coming in there, so I will not be a buyer in those stocks.
Q: What’s your sense of what the RBI may do and how the stock market is positioned before that event?
A: There are no compelling reasons for it just because somebody else has done it and there is an interest rate differential which has gone up. Having said that if one looks at some of the negatives, which are still continuing, which is the money supply growth is still at more than 23%. If one looks the credit growth has decelerated but it is still in the higher 20’s. I don’t see a compelling reason to reduce at this point in time, particularly when there is inflationary pressure from the oil side not getting factored into. Having said that if one looks at the market at 18,200, I think we have very much bounced back to a level which again makes it slightly overvalued and as we have mentioned time and again that this is a level, which doesn’t makes a fresh entry level to get into stocks.My sense will be settling somewhere around 17,000 levels which will be more comfortable. The market has gone ahead on the basis of US Fed reducing 75 bps and in anticipation that India will also reduce it but I think the market may have a disappointment from that perspective.
Q: Which of these rate sensitives makes the most sense to you banks, real estate or autos?
A: Infact banking is fundamentally looking very attractive. If some amount of reduction happens in interest rates by RBI or even otherwise because of market forces. I think banks stand to gain maximum. Then you have autos to a large extent, however we have already seen them shedding quite a bit and now slightly recovering from the lows. Real estate still valuation wise doesn’t offer very high numbers from the current levels. There are other secondary sectors, like cements to some extent, which is driven by these things, and auto ancillary to that extent and they will also probably start gaining little bit.
Q: Would you buy anything from the autos now?
A: Stocks like M&M and Maruti still provide some upside purely from fundamentals and valuations not getting carried away by the recent upside. I am still skeptical on the two-wheelers but there are opportunities in the auto ancillary and we are observing that the margin pressure, which was there, is now easing to some extent and so that is another space to look at.
Q: How would look at fertilizers as a sector, its corrected quite sharply most stocks are down more than 50%, is there an opportunity there or not quite?
A: The way it has gone up, I don’t think the fundamentals were the main reason behind it and so fundamentally I don’t see any strength coming in there, so I will not be a buyer in those stocks.
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