Outperformance in select midcaps is on the cards: Sanjiv Bhasin, IIFL Securities
India becomes a sweet spot on the back that oil is in a bear market. We have got bond yields, rupee and most of the uncertainties on governance on the RBI over with, says Sanjiv Bhasin.
Our understanding is autos are going to lead from the front. The metals pack is also showing a lot of promise, Sanjiv Bhasin of IIFL Securities, told ETNow.?
Edited excerpts:
ET Now: Are you advocating buy through the close out of 2018?
Sanjiv Bhasin:?I have been bullish on the market and proved correct and we are now closer to 11,000 rather than 10,000. All that pessimism is over. For the Indian market, the lesson of 2018 is buy the fear and sell the greed. There is still a lot of fear around and people are waiting for corrections. They have been caught napping if they have been tracking the other asset classes or the other indices where China is in a bear market and the US is having problem of its own.?
India becomes a sweet spot on the back that oil is in a bear market. We have got bond yields, rupee and most of the uncertainties on governance on the RBI over with. The next 3-4 months can be pleasantly surprising because we think earnings are going to be a catalyst, along with flows because we have again seen foreigners turn to buy. Locally, we have had the backbone of this market being the retail investor and the SIP. Put your money where your mouth is. I still think midcaps can outperform in the next few months and that is what we are advocating to buy, select midcaps in most sectors where outperformance is on the cards.?
ET Now: When it comes to Tata Motors, has the view now changed, with recent news coming in that they are looking at downsizing in order to turn profitable and getting in some serious cost control measures. Do you sense that Street would give this stock perhaps a rechance??
Sanjiv Bhasin:?Like you said, most of the pessimism of autos may be in the price and if you are looking for elections and beyond, then relatively Tata Motors can outperform. The other caveat being if the pound in which they have an unhedged position starts to stabilise, you could see some mark to market return. But we still think autos are going to lead from the front. If I could select three names, it would be Bajaj Auto, Maruti, Eicher Motors and Ashok Leyland. Ashok Leyland is my dark horse because we think this month onwards before the budget they will see much of their inventory getting cleared and we think that the 15-year norm will change which will help them gain market share in MCV and LCV segments.?
ET Now: Suppose from 10,000, there are a few sectors which have really done well and there are a few sectors which have not yet performed. Any churning you would recommend to portfolio holders or mutual fund managers where you feel that this sector has run up substantially, you do not see further upside from current levels which does not mean that you are negative on that space but there is more attractive sector now which has not done so far so good.?
Sanjiv Bhasin:?IT should be given an avoid unless you want to be in fully priced stocks where we do not think earnings will be a catalyst. But yes, if I could stick my neck out, I am very bullish on the metals pack. We think the pessimism is overdone, protectionism in US will see again 2019 being a very good year for results. Locally we have seen steel prices harden. The basket of JSW, Tata Steel, Vedanta and Hindalco is looking excellent.?
PSU banks are going to report very good numbers starting from State Bank, Can Bank, Indian Bank. Corporate banks are already leading from the front like Axis and ICICI and a Federal Bank if you can put the midcap basket. Autos I just suggested four names. I am very bullish on the gas utilities. MGL, IGL, GAIL all are looking excellent on the charts and so a whole host of stocks. As for power stocks, the CERC new guideline will be very very positive for some of the PSUs. I would be sticking my money on CG Power to be dark horse for 2019.?
ET Now: Are you more bullish on the power space??
Sanjiv Bhasin:?We have had our top picks and we have made money in that. If you recall, we were very bullish on the power financiers before the merger talk came. PFC and REC gave almost a 30 per cent return. We still think that today???s review petition is very very positive for the likes of NTPC and Power Grid. The only caveat here is that there is a government to manage its own balance sheet is seeing merger of some stocks to raise necessary cash.?
In this power space, you can pick up some of the power producers or you can see some of the utilities. So Calcutta Electric looks very good to us. Reliance Infra has sold its arm to Adani Power so that could be another good play to be with, but our outperformer here would be a small company called CG Power which we think is selling some of the over leveraged assets in Europe and where return on equity could sharply improve in 2019.?
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