Choose your stocks in the next 10-12 weeks and keep a SIP in Nifty & Bank Nifty. Buy the heroes, buy the outliers but also buy some of the villains because the undertone of despondency and capitulations in the broader market can pay rich dividends in the next three months, says Sanjiv Bhasin, Executive Vice President, IIFL Securities. Excerpts from an interview with ETNOW.
One can go against the crowd and start buying cyclical industrial stocks, or go against the crowd and start buying consumption stocks because consumers will make a comeback or third is that you do nothing in this market and simply sit on cash and let this market fall and come back after 15%?
Well you have spoken of the FII selling and you have seen marquee names come off and thats why the index has corrected 700-800 points. I think 11000 will be the ultimate support and I do not see that getting breached even in this accentuation. FII flows are fair weather friends. A taxation talk will always affect it. I thought the earnings of Lever, Zee, Reliance, ACC are the bellwethers.
The inventory overhang is getting done in auto, financing is now coming back on stream and that will lower cost. It will all see a lot of output on missing consumer discretionaries like auto. My call is that do not try and time the market. It could go down 200-300 points, but at least be in the market in this time of the year because these 10-12 weeks will see the ultimate bottoming out of all macros. Like I said, middle of October onwards, I would be very bullish on the global and local markets where a lot of the uncertainties to do with liquidity will start to clear up. We should start to see more revival in earnings going forward.
What is your take on L&T and HULs performance? Would you be keeping any of these stocks on your radar to buy at some more dip levels?
Let us not get on the bearish side. The management is cautious but that is to do with prudent management. The government is waiting for bills to be passed in Rajya Sabha. By the way the Lok Sabha since the last historically has passed the maximum number of bills which is telling you that the parliament is up and going and we would expect much more prudent action in the next few weeks coming on account of a) revival of growth consumption and b) lower cost borrowing for the government means pass-on effect in capex will again be a matter of time.
The next three months can see unleashing of a large number of orders on infra, ports, roads and highways and that inordinately will mean looking at L&Ts Rs 3 lakh-crore book for the next three-five years. You cannot go wrong in a stock like L&T. Lever has shown you a smart rise in margins despite this slowdown and even on a base effect.
Consumption should start to see much more traction from now onwards to the festival season and beyond.
These stocks are worth buying on all declines but my suggestion to investors is choose your stocks in the next 10-12 weeks and keep a SIP. Buy the heroes, buy the outliers but please buy sRead More – Source