“Not factoring in any international events that are very disruptive, the indices are seen to move up higher next week,” says Vinit Bolinjkar, Ventura Securities.
Does it feel that the market is out of the slumber for sure and now we are headed for 18,000 or higher levels?
There are a couple of things which have happened. One is GQG coming in and investing in Adani, they have beefed up the sentiment for a stock which had seen a massive rout. But with the revival of the trend in Adani, it is believed that this sentiment would replicate in the other sectors too. We have already seen the PSU banking pack rallying in line with Adani stocks and the sentiment, the fundamentals of the economy could have never been better and that is now going to be reflected in the stocks. Not factoring in any international events that are very disruptive, the indices are seen to move up higher next week.
What is the outlook when it comes to the entire consumption space? Do you believe that the next quarter is likely to be a bit more promising in light of input prices cooling off or we are likely to see inflationary concerns persist?
They are two opposite forces that are at play, one is that on the back of the El Nino effect, the rainfall might be lower than expected. But India has done enough water conservation, which can take us through at least two bad monsoons. So, that should not be much of a problem. Furthermore, this year’s rabi crop is expected to be a bumper crop. So, there is a belief that this will fuel consumption and hence despite lower rainfalls, aggregate spends would be much higher than what has been registered in the recent past.
How should one approach the cement basket?
I will choose Birla Corporation and also Shree Cement and UltraTech. For the time being, I would not be looking at Adani cement stocks primarily because we believe that they are richly valued at the current levels.What will be your recommendation to the retail investors who have missed let us say, the PSU banking rally last year? Will they make a good buy even now?
There is definitely a case for buying PSU Bank stocks given the fact that their asset quality has been fully provided for, growth is going to be very high and the NIMs are also catching up with their richer cousins which are the private sector banks.
What is your take on midcap IT?
The IT entire pack, I remain very guardedly cautious, not recommending at all at these levels to look at, the reason being that internationally, we are going to see a severe disruption in the currency setups.
We believe that the US debt is clearly unsustainable. And the world is in the throes of a de-dollarisation trend and that can severely dent the currency movement. Also, we have seen Wipro cut salaries very, very aggressively for engineering students who were supposed to come on board. So given these cues and the slowdown in spending in the US, there is a belief that IT can be sort of a disruptive trade. So precisely we are not long on the sector and in fact very, very cautious of it.
What is your take as far as defence and industrials is concerned, because we continue to hear about these order wins coming in for the defence names, some tie-ups, some MOUs that they keep on signing. But if you look at the quarterly earnings, they just do not show up in the numbers?
These tie-ups and these new orders that come, these are long-term orders which are executed over multiple years. So it augurs well for revenue visibility and that is what is shoring up the valuations. So eventually the numbers will come. They might come with a bit of a lag, but the numbers will definitely come. As far as the industrial pack is concerned, I second the fact that L&T has consolidated really, really for a very long time and is due for a vertical move emanating from any time now.
You said how GQG buying into Adani has changed the tide for at least the near term. So, which shall be the top bets from the entire Adani Group empire that you would recommend to your clients?My pecking order would be Adani Ports, Adani Enterprises and Adani Transmission.