Talking to ET Now, Sudip Bandyopadhyay, group chairman of Inditrade Capital, says despite weak global cues, markets have not seen huge sell-off. He also shares his views on ICICI Bank, Reliance Industries and reveals his favourite pick.
Edited excerpts:
What happened in market this week, metals were down, banks were up, Nifty was flat, what were your key takeaways?
Well, we must look at the global cues. The global cues were very confusing and sometime very worrisome. I think that led to the overall tone of the market. If you look at the global markets, there was a lot of confusion with the trade war getting escalated between China and the US, with the way the oil prices behaved, the way the global markets behaved. There were concerns and that got reflected in Indian markets. Domestic issues also did not help. There were little concerns around the progress of monsoon and that also dampened the sentiments to an extent. However, I will also like to reiterate the fact that in spite of the negative global cues, it is not that we saw a huge selloff, it is not that the market has moved down significantly. Market has taken a range bound nature and has been moving in that range. I think for the foreseeable future, unless there is a news which will lead to a breakout, the market will continue to remain in this range.
Any quick view on ICICI Bank?
We have become positive on ICICI Bank post the leadership change. I think there was a lot of confusion regarding Chanda Kochhar's continuance in the role while the probe is on. I think with Sandeep Bakshi coming in, he has been there done that, he has the kind of respect which is required to run such an organisation. I think, it augurs well for the bank for the time being. Of course, the stock has been beaten down significantly over the last few quarters, and at current levels for an aggressive investor I think it is a good entry point.
If oil settles around these levels or is slightly lower which are the sector that you would look to buy into?
Sudip Bandyopadhyay: I think, it benefits Indian economy, since we are a significant importer of oil. Oil stabilising around the current levels or a little of here and there is good. Government budget was around $65 per barrel level, RBI estimate is also close to $70 per barrel, so I think it is still manageable if oil settles around this level.
As far as sectors are concerned, I think oil import bill coming down or not at least going up helps the currency, and if currency gets helped, obviously, the stability comes as far as the raw material costs of the companies using global metals and oil as source. So, I think OMCs will be one place to look at if oil prices stabilise and come down. Also, the companies using multiple commodities in their production facilities will benefit out of this. And overall, I think the economy benefits which in turn benefits pretty much all the sectors.
Any view on Reliance Industries, the stock hit a lifetime high this week?
Well, Reliance has been a favourite with us for some time. The stock has still some way to go. We are recommending a buy. Look at telecom, they have changed the landscape and there are still to come. Performance is improving on the telecom side; revenue is expected to improve even further in this quarter. The largest retail business in the country probably it is not getting properly valued, at least the value is not getting captured in the stock prices yet. Oil refining as well as petchem business has done well in the past few quarters and things are going to improve from here on. So, overall, we have been bullish on Reliance, and even at the current levels, we believe it is a good long term buy.
Any picks that you have at this point of time?
We like Federal Bank quite a bit. It was beaten down post last quarter's results. You know asset quality has been bit of a concern however, if you look at the other side of the business which is the income side, I think the loan growth has been commendable. The other income, which was never anything great with Federal Bank, has been improving and even if the asset quality issue, the SME loan book, retail loan book has been good. The only problem was in the large corporates and that has been volatile and there has been issues there. We strongly believe that is stabilising and things are going to improve from hereon. Looking at the current valuation we believe that there is an opportunity of buying the stock at current levels for a one-year hold and expectation is of a price of around 120.
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