Bullish on these 2 stocks next week: Yogesh Mehta, Motilal Oswal Financial Services
Where will the leadership in Nifty come from if we go all the way up to 11,000?
Till 15 days ago, nobody would have imagined that Nifty would be recovering 4-5% in such a short span because the outlook was very bleak due to crude prices and the rupee decline. Now it has been reversed and again it is in favour of the Indian economy.
Post earning season, while the numbers have been better. overall, from the number perspective, there has hardly been a 3-4% cut in the Nifty EPS and the growth rate would be 13-14%. We are trading at around 20-20.5 times PE multiple for FY18.
So next week, probably Reliance and SBI could turn out to be the winners. PSU banks will be more in focus because of the RBI board meeting and let us see what is the outcome of that.
The PSU banks have shown some kind of upmove from the bottom level and so that needs to be watched.
Is the worst over for OMCs and aviation stocks?
It would be difficult to say anything on the aviation sector because the ad hoc cost and the expenses are still very high. Apart from crude, the ground staff and other costs are very high. In the second quarter, all the companies have incurred heavy losses along with the crude prices which has moved higher. Post cooling down in the crude prices, we can see some relief for companies like Jet Airways, IndiGo and SpiceJet.
IndiGo has done very well in last eight years and they have not incurred any loss so far. This is the first ever time they have incurred loss in the second quarter. We can see that sign of relief there for IndiGo. Jet Airways still it is going through a transition mode or maybe in initial talks for the management change or maybe any other kind of changes in the management. That will play a major part in the sentiment for Jet Airways in the coming week.
As far as aviation is concerned, IndiGo would be the preferred one where we can see some better action.
How critical is the RBI board meet going to be? What is the market looking out for from there?
The RBI board meet would be critical because one has to look out for the changes if any in the capital adequacy ratio of the banks. The working capital needs to be maintained. I think it will keep be a patch-up kind of a situation between the government and the RBI governor. There could be some clearing of air and that will be good for both investors and traders. It will set the mood for the RBI policy which will come out in the first week of December.