At what juncture would you tell your clients that the macro has deteriorated and it is time to start raising cash?
Crude is the most important factor for us.Rest all other factors are important but near term, crude will play a very important role for Indian equities to be in. So as long as crude is soaring, we will see the markets continue to underperform or move sideways.
Are PSUs good for investment or still a trading bet?
A few select pockets in PSUs are definitely good for investment and they have been dirt cheap. At some point in time and in markets like this only, will they get some kind of valuation. So a select few stocks definitely look very attractive. They also have triggers like disinvestment. These should be in focus as they are available at reasonable valuation with a good dividend yield. One should definitely look at the PSU as a basket rather than investing in one or two stocks in multiples of five, six stocks which look interesting going forward.
How would you view the coming earnings season? Do you think markets are already pricing in a good earnings season?
Absolutely right, Markets have been anticipating a good earnings season. Old economy stocks like wholesale bankers have been reviving and making a comeback. So my sense is it is already discounted in the markets that this earnings season should be good for the PSU banks, private sector banks, IT as a basket and the overall auto pack as well.
What is your outlook on the OMCs and how you are looking at this space?
The way the crude prices have been going, the best bet to play on the OMC front is
It has a flavour of disinvestment as well. We saw a selloff from their treasury shares and the selloff of their refinery which indicates that going forward, disinvestment is on the cards. Valuation wise it looks attractive. Plus it makes good dividend payouts. Decent gains can be made in BPCL from the current levels. There could be a short term momentum as on BPCL.
The entire power theme is the Street’s favourites, but what do you make of the sporadic spurts in Tata Power, Power Grid etc. Is there an investment opportunity here?
In the entire power pack, the best play is Tata Power. We have seen the entire Tata Group getting rerated and most of the stocks are back in action and have done very well. Coming back to electric cars, charging stations will be needed. The valuation metrics itself gets Tata Power the best bet in the power sector, if someone wants to invest. There could be another 20-25% upside in Tata Power vis-à-vis the entire power pack and a few stocks have run up quite sharply in terms of market cap. Tata Power looks very attractive against them. One should look at Tata Power from the current levels.
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