November 7, 2024

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investment strategy: Is this the time to start buying again or should you wait more? Hemang Jani answers

investment strategy: Is this the time to start buying again or should you wait more? Hemang Jani answers
Hemang Jani, Independent Market Expert, says this correction is providing a good entry point. While nobody has clarity on exactly where the bottom would be made, we are somewhere there and maybe over the next few days or few weeks, that base formation would start. In terms of sectors and stocks, some of the banking names reported good numbers, so some of the private banks and select PSU banks. FMCG has been a pocket that has remained slightly subdued and the management commentary has not been great, so would stay away from FMCG. But automobile, pharma, and telecom are the spaces I would be comfortable entering during this volatile phase.

We are only weakness creeping into the markets, with the broader markets taking maximum hit. Which side of the fence are you on when it comes to sectoral bets? Do you think now is the time to take a plunge or just sit back and wait?
Hemang Jani: In the last two-three weeks, we have seen across the board weakness and which is because of the aggressive selling that we have seen by the FIIs to the tune of almost about Rs 90,000 crore. But when we look at the earnings picture, anyway this quarter was supposed to be slightly muted at about 2-3% kind of earnings growth on the Nifty front and the actual numbers are also not suggesting any great positive surprise as such.

But I think that this correction is providing a good entry point. I do not think anybody has clarity on exactly where the bottom would be made, but we are somewhere there and maybe over the next probably few days or few weeks that base formation would start.

In terms of sectors and stocks, I do think that some of the banking names this time around reported good numbers, so surely some of the private banks, select PSU banks. FMCG has been a pocket that has remained slightly subdued and the management commentary has not been great, so would stay away from FMCG. But automobile, pharma, and telecom are the spaces where I would be comfortable entering during this volatile phase.

After its results, the TVS stock corrected 6% and that has been the nature of this earnings season, any bad number and it is getting punished quite massively. Do you expect a recovery today because there was a clarity from the management on the concall that at least in the Navratri the sales were up 10-11%? In Q3, they are clocking a single digit growth at the moment, but are hopeful of a 7% to 8% growth for the entire year. Do you expect a bounce back?
Hemang Jani: The numbers were okay. There are two takeaways from the numbers and the management commentary. One is that the recently launched Jupiter 110 has been received very well by the market and at the same time on the motorcycle front TVS has actually underperformed after a long time. So, while that segment per se is likely to do well, our preference within the auto and the two-wheeler space at this point would be Bajaj Auto which appears to be relatively better placed because of the larger component of the export growth and a good management guidance. So, we would go with Bajaj Auto at this point.

It is just one of those yes and no kind of stocks. AU Small Finance Bank is a high growth bank and has a catalyst that eventually one day they will become a universal bank. Is that a good enough reason to buy it because it has a low base and high growth and there is a catalyst. Do you think this will qualify as a good smallcap bank or midcap bank to own?
Hemang Jani: If you look at the performance of AU Bank over the last couple of years, it has been pretty decent and operating parameters wise also in terms of margin, asset quality, by and large the bank has done well. The only issue with this bank and the banking sector per se is that the valuation of AU Bank is 3.2 on an FY26 book. So, when the entire market is going through this kind of a corrective phase and when you have many other large private sector banks available around the same or slightly lower valuation, then the tendency to go for AU Bank will be less, but as a pure midcap play, given the way the company has grown, I would surely be fine to have that as a part of my midcap portfolio.Silver and gold prices are going higher. What is the best way to benefit from that? Any thoughts? A month ago, everybody was talking about mid and smallcap stocks. Now, they are saying forget that, the real action is in gold and silver. For an equity investor, are there any ways in which you can benefit from this rally in gold and silver?
Hemang Jani: Some of the companies like Hindustan Zinc have a fairly large component of the revenue which is linked with the silver and so that will be one stock that one can surely look at. I do think that there are ETF products available in the market which are hybrid also and which are pure play silver also, which one can really look at it. So, these are the two things I can think of when it comes to the silver participation.

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