Hapag Lloyd, Shivani Oil to do well: Sharekhan

Hemang Jani, Senior Vice President, Sharekhan said that the Infosys numbers and the hope that the inflation and the monsoon will be favourable have given the market a postive trigger.

 He also said that oil as a theme has really picked up extremely well and with the way the crude prices have shot up, Hapag Lloyd and Shivani Oil in particular and some other stocks as well, which are in the mid cap space, like Orbit Corporation should do well.

Excerpts from CNBC-TV18’s exclusive interview with Hemang Jani.

Q:  Your perspective on how the earnings season has started out, with Infosys results, NTPC provisional numbers out of the way, what is your sense on how the earnings season has started out this time and the market mood in general?

A: People had extremely low expectations from this quarter results and they were factoring very disappointing numbers on the whole, the Infosys numbers have definitely given some kind of a positive trigger to the market, apart from that  the IIP numbers which were out on Friday, have also gone down extremely well with the market and there is hope that tomorrow the inflation numbers which are going to be out would be slightly better than what they were in the last two weeks, Also, today we are expecting the meteorological department to predict the outcome on the monsoon, which is expected to be normal, our markets have also under performed in the last 3 months, all these factors put together have given a positive trigger and we should see some strength in the market going forward.

Q2: What did you make of the IT earnings so far and what’s the call on this sector now?

A: People were expecting subdued numbers from Infosys and HCL Tech, even in HCL people had expected a huge Forex loss etc, but if you actually look at the numbers, they are quite good and at current valuations, if you are looking at a 15%-20% kind of a revenue growth or somewhere around 15% kind of a net profit growth, the valuations are extremely good, we think this should give a boost to some other IT stocks also.

Q3: What is your sense on the key event that the market is looking at now, is it the earnings season or has focus shifted to the credit policy, inflation or possible monetary action from the RBI, or is it still global events, a whole host of banking results are going to come out this week from the US, so what are the key events the market is primarily looking for?

A: The key events that the market is looking out for is of course the earnings because the way the commodity fluctuations have been in this particular quarter, currency, market fluctuations and the Forex losses etc, that people were talking about, the focus is clearly on the earnings season. Apart from that, because of the way the inflation has gone up, there is a definite fear that the RBI may take some strong action to control liquidity in the system, but the fact that they haven’t really taken any decision possibly means that they are also in some kind of a dilemma. So if nothing happens in the immediate future, then definitely the markets would react positively to it.

Q3: What are your top mid cap picks right now, given the rally across the universe?

A: Oil as a theme has really picked up extremely well with the way the crude prices have shot up, Hapag Lloyd and Shivani Oil in particular and some other stocks as well, which are in the mid cap space, like Orbit Corp, and some other mid cap stocks that we covered. I think these stocks should do well in the short term.

DISCLOSURES:

Personally I might be holding some of the stocks that we have talked about and they are also under our coverage.