Keep adding to your portfolio, stay put, do not keep watching XYZ because only by staying put and being invested, will you make money. Toh agle hafte 15 tarikh ke baad, second half mein new high aane wala hai, aur jo underperformer hai, Reliance, HDFC Bank, they will catch up (Next week, after October 15, there will be a new high in the market and underperformers like Reliance, HDFC Bank will catch up). But there are enough legs, Maruti, L&T, Titan; metals are now poised to do very well.
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Already most of the PSU metal stocks, NMDC, GMDC have done well. It is now the time for Tata Steel, Hindalco to join this rally because the dollar is headed lower and commodities will do very well in the coming quarter.
Why have markets not reacted to all the geopolitical tensions this week? What are markets betting on?
The market is discounting now that the Fed maybe going to cut the rates by the end of the year, and the rally that we have seen in bond yields is slowly going to ebb out because more and more money in this sphere has gone into bonds and that has got the yields lower.
Secondly, if the dollar weakens, then the feel-good factor for emerging markets particularly will be very strong. On India’s demographic, we are at the cusp of the festive season and beyond and consumption is going to be very strong, as is evident from air travel, hotels, and the like.
So, the global rally seems to be because the dollar has peaked out and so have yields and equities are in a sweet spot. Some results are due, particularly in the US. They could be the trendsetter for further upside and when the markets stop falling on bad news, that is the time one has to wake up and understand that the trend is your friend, you can catch these falls and make money on the upside.
Are there any stock ideas that you’re working with? You were just alluding to the fact that for the India-Pakistan match, all hotels, flights have been booked. Maybe some ideas there?
Well, those stocks are already on fire, Indian Hotel, Indigo; but I am very bullish on the metal space, particularly Tata Steel and Hindalco. You cannot get better names than these. In fact, I had a buy on Hindalco on Friday morning when I gave my call and a sell on Mphasis. Mphasis was a weak stock. I am very bullish on Hindalco, Tata Steel and I like Bajaj Auto in this correction. Bajaj Auto numbers will be the best we have seen in the two-wheeler space and exports are doing extremely well. So, the weak rupee is going to benefit Bajaj Auto a lot.
Also, Gujarat Fluorochemicals is up 30% in the last four days. We have been recommending that stock. I think fluorochemical prices may have bottomed out and can see a sharp upsurge. So, SRF is one stock which I am betting on hitting Rs 2,750 by the end of this year. That is an investment pick. SRF can be a huge dark horse on the back that numbers, fluorochemical, nylon cord tyre, all the businesses which SRF has, you know, some part of them.What about the good old China connection with steel stocks?
Well, it is going to come faster than you thought. There will be some relief packages. And I think they are working on that, who knows, over the weekend. And actually, that will be the compounding factor. Plus, if the dollar weakens, then exports will pick up. By the way, I know that steel prices are going to be hiked by about 8 to 10%. I think the other metals will follow suit. NMDC, GMDC have hit new highs. It is on the back of the fact that minerals are in a very sweet spot when such an event happens. Sooner rather than later, there will be a shortage in one of these areas, which will see commodities do very well.
The other talking point today is that inflation has peaked out. Vegetable prices, fruit prices, oil prices, vegetable oil prices, all are down. That has immediately sparked a rally in Tata Consumer, Britannia, HUL. Is there merit in catching on to that trade?
Definitely. Consumers are going to be key there. All these are producers and huge market leaders. Nestle has hit a new high and there is the talk of the split and so on. And it is not on the back of just numbers. Nestle had committed about six months back that they are going to put in Rs 5,000 crore capex. Now, in such a big company, we are seeing guidance and it is seeing the variability of money then only they are going to put in more money. Nestle, Britannia are coming of age and have new products.
The consumer is ready to put that extra money and this fall in commodities inherently will be an added advantage on the margins. Even the import-export numbers are very sweet. The rupee should be a key beneficiary over a period of time. If the dollar is going to weaken, then commodities and the consumer plays are very strong. We have a buy as a disclosure on Nestle and Tata Consumer. We also added Marico. This weakness is an opportunity because that is one play which is going to be key in the type of portfolio they have.
Much ahead of the festive season and, much like some of the discretionary plays, autos will also see a lot of buoyancy. On Friday, there was a big spurt on Tata Motors. It went 4.5% higher. Where are your preferences within the entire passenger vehicle (PV) space?
Maruti has been our top pick and that has really outperformed. We think Maruti share will touch Rs 12,000 by the end of the year. All the people on the sideline will keep watching because they have an order book of 35 lakh vehicles. Delivery is going to be the issue. Tata Motors, of course, is the biggest player and has the benefit of EVs and JLR. But two- wheelers are not going to rule the roost. Ashok Leyland in the passenger vehicle/ commercial vehicle and Bajaj Auto are two the names which are very, very bullish.
Tata Motors, Maruti, TVS or Hero MotoCorp? All of them have a different play.
Very difficult because they are all hitting new highs. But rather than Hero, I will go with Bajaj Auto. And not Tata Motors, I would put my money on Ashok Leyland. I think they have garnered more market share. And yes, Tata Motors is the institutional favourite but I would put my money on Ashok Leyland.
