ET Now: Financial stocks had a good week, with Bank Nifty moving 400-500 points in just three trading sessions. The operational updates have been robust, and there is momentum in mid and small cap banks too. Where do you see opportunities in the financial sector?
I agree that the sector has seen good momentum post the strong quarterly updates from HDFC twins and Bajaj Finance, but I still prefer to stick with large-cap banks. HDFC is my top pick given its strong updates and the volatile market conditions. I also like State Bank of India in the PSU pack, which looks interesting after a recent correction. Overall, I see these two financial names as strong opportunities in the coming week.
ET Now: The real estate sector saw a significant uptick this week. Do you think it’s a good time to consider buying some of these stocks, especially considering the affordability factor?
While we did see a good rally in the real estate sector, most of the stocks saw a significant correction after that. Moving forward, we need to identify specific pockets and stocks that are likely to continue performing well. Among them, I believe Lodha, Oberoi Realty, and Prestige are good options to consider. Overall, the real estate sector seems very promising, especially considering today’s RBI policy, which did not announce any rate hikes.
ET Now: Would you consider investing in any of these FMCG staple names or how should one approach them?
Looking at the Q3 numbers, it’s evident that there was sluggish demand from consumers. Thus, the upcoming quarter results will largely depend on consumer demand and the impact of seasonal rainfall and inflation. If volume picks up and consumer demand improves, we could see a re-rating.
Otherwise, there could be select pockets where margins will be impacted, or margin expansions due to cooling off of commodity prices. In this context, I would consider Godrej Consumers to be a top bet, followed by Marico. For the rest, I would wait for the quarterly numbers before making any investments.
ET Now: The Street has muted expectations, but after the surprise coming in from Accenture, do you think there might be a chance of companies surprising with large deal wins? Which camp do you want to be in — the one that says there could be a surprise or the one that says there could be a shock?
I believe the near term could bring a surprise rather than a shock. The markets have been through a lot, especially with Q3 numbers and post the events with the banks. The global environment has been volatile. Tech stocks could have mixed earnings in the near term. However, if I take a longer term view, I would stick with HCL Tech, TCS, and Infosys, all of which have decent valuations at current levels. While there could be challenges in the near term in terms of demand, these companies look very promising for long-term investment. So, while there could be a near-term surprise, one should take a longer-term view for technology stocks.
ET Now: With the RBI’s decision to pause, there are talks of India’s markets becoming cheap and a potential buying opportunity for FIIs. What are your thoughts on this and how does it affect your sector view?
I believe that the recent bounce back in global markets and the positive Q4 updates from companies like HDFC and Bajaj Finance indicate that the Q4 remains strong. Therefore, I think we should see a higher allocation from FIIs in the near term. In addition, the updates from sectors like cement and auto sales have also been strong. Overall, if the numbers continue to be positive, I don’t think FIIs need to be underweight on India. So, I believe we should see a re-rating and investors coming back.
