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Next 18 months belong to India: Sanjiv Bhasin, IIFL Securities

Mumbai | November 01 2019 12 : 16 IST | The Economic Times

We are at the cusp of a huge rally where growth capital and risk capital both would be back in India, says Sanjiv Bhasin, Director at IIFL Securities. 

Your call is playing out very well. What do you see the road from here on for the markets?
I was one of the few who was telling buy the fear and these 12 weeks will see a huge upside over a period of time. I am being proved correct. Sensex has hit a new high and it is just a matter of time that Nifty goes to a new high. But that is not the key. The key is participation and buying the fear.

During this downturn, the government was trying to do what they could and we saw stock prices at decimated values. I still think the midcaps are extremely attractive. If you have a longer term view, then there is no holds barred. Whether the index has moved or not, you should be looking to invest.

We are in a very sweet spot now, given our macros are starting to improve and given the government initiative on corporate tax and the proposed strategic disinvestments. The next 18 months belong to India.

I also feel that there will be a huge global rally from January 2020 which will set the cat amongst the pigeons. It is a good time to start buying stocks. Two months back, the worst sector was auto. From Rs 5,500, Maruti is now at Rs 7,700. Eicher Motor has gone up from Rs 16,000 to Rs 22,500-23,000. That tells you how much of pessimism was built into it and how this festive season and certain government initiatives have helped shore up a lot of value.

In the last six months, the biggest area of outperformance is banks, financials and Reliance Industries. What are your thoughts on these two spaces?
Markets are forward looking. They price in the worst and move ahead. Now you are talking of a huge base effect from where earnings could be flat for a quarter or so. But the impetus of Rs 1.5 lakh crore, the strategic disinvestment, all will make a lot of pillars for a large part of the broader market to outperform.

We are in an interest rate scenario where rates are at four-year lows and here, the fiasco of certain NBFCs have seen mistrust and credit withdrawing. Once that starts to expand, like we saw this festive season, we will be headed for very good times.

I am slightly more optimistic than most and I can actually stick my neck out that it is not going to be the same 20 stocks which will lead the index. Maybe, it is going to be the broader market of thousands of stocks or sectors where we will see a huge uptick.

Just to tell you, YES Bank from Rs 30 is up to Rs 60 and so on. PSUs are really the jewels in the crown, if one of the strategic disinvestments happens, you will have to ignore the rhetoric and put your money where your mouth is. This is the time for huge money to be made. Two, three times is what I can see select midcap stocks do over the next two years. Like I said, you will never get the perfect storm where earnings and macros match the market. If those things were matching, we would have been at 14000.

So I think that India is in a sweet spot and the two years from here on, the equity market looks extremely positive for me.

What are your thoughts on YES Bank?
Well that should allay a lot of fears that banks are going to close down. I think that tier-1, tier-2 capital is okay and what was needed was growth capital. In a sinking ship, it is the rats are that run first. It is now the real bellwethers who are holding it and this is an incredible brand and franchise which you have. I do not rule out Rs 85 where the QIP took place coming back and if you are a patient investor, then these are times when you can make real pickings.

I have five banks under my coverage which I am tracking very actively at these prices. RBL would fit the bill perfectly along with a DCB Bank, Federal Bank, PNB and Bank of Baroda. I think this is just the starting of a cusp of a huge rally where growth capital and risk capital both would be back in India in a huge hurry.

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