A lot of froth in the market has got wiped out: Sanjiv Bhasin
A glance at the stock correction suggests the sifting of the men from the boys has begun, says Sanjiv Bhasin of India Infoline.�
A glance at the stock correction suggests the sifting of the men from the boys has begun, says Sanjiv Bhasin of India Infoline. Earnings from the September quarter onwards will surprise on the upside, he told ETNow.?
Edited excerpts:?
What is your sense, I mean, is this a directional cue? Are we now reaching that tipping point where we are likely to see a massive revival or do you think the picture is still quite hazy when it comes to both the currency as well as crude prices??
So, it is a proverbial tipping point, oil at $80, rupee falling no bounds and bears having a heyday. But it is kudos to the government that it finally woke up and it has at least talked up the rupee.?
The worst may be priced in, 73 does not seem to be a level where the rupee can breach and oil at $80 may have already been accounted for in the worst of Hurricane Florence. We think that both the variables now look towards the downside.?
And third, we have an emerging market which has got decimated. We think next week, maybe Wednesday and Thursday onwards, you should see a strong rebound both in the emerging market basket and a cooldown in the dollar index.?
So, the US is going to lead from the front, we are thinking of a new high for the Dow in the early part of October and the global markets will follow suit. However, in the interim like you said rightly, the volatility has been there and rightly so. There was a lot of froth in the markets which has got wiped out and now, you have seen the sifting the men from the boys.?
Going ahead, we think the Nifty will be in a better space, but it will be the broader market which will tend to outperform.?
Praj Industries with 70 per cent market share is turning around faster. Will Praj be a major beneficiary of this ethanol blending move by the government??
Yes, definitely I think it stands to benefit the maximum and we are seeing that soft commodities are now in the process bottoming out globally. Sugar has been on a weak cycle because of the mismatch of demand supply and now with the upcoming festival season, there will be further pressure on prices.?
You have also seen a smart pullback because of the MSP being hiked. We are very confident of 2-3 stocks because you will have to buy it somewhere where the cycle is about to turn. Only then, you will you benefit from the upturn cycle which can take 6-9 months to get into.?
So if I had to suggest three names, aside from Praj Industries which benefits from ethanol, it would definitely be Balrampur Chini, DCM Shriram and EID Parry. As a dark horse, we have been very bullish on Bajaj Hindusthan. It has become a penny stock at 6.50, but that also has a lot of ethanol blending capacity and it would gain mainly from that. The caveat here is that you would have to hold it for at least a year to get very very good returns.?
What is it that one needs to keep on their radar for the week ahead??
Well, I think next week you will again see some sort of volatility and ebbing. The real thing to look forward to would be the Fed action. A 25 bps rate hike is already priced in, but given the strength of the dollar, would the Fed start to turn dovish? That will have deeper implications around the weekend of 25th, 26th and that will set the course for rates globally.?
In the Indian context I do not see any change in rates till we get to the policy. However, like I said, earnings are going to start to surprise from the September quarter onwards on the upside and that is something which we will be looking forward to. So again, the volatility is your friend if you can watch the market and digest the rhetoric. But we think the way ahead should see a higher uptick going into the end of September.?
