Benchmark indices witnessed one of their biggest falls in 2013 on Monday led by heavy selling in FMCG, capital goods, metal, IT and auto stocks despite positive regional shares after the sharp four-week rally. The Sensex lost 430 points to close at 19692a and the Nifty lost 127 points to close at 5980.
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Rajen Shah of Angel Broking feels that this is just a correction and there are no reasons to worry. “300 point correction is a bit too much in one day, but certainly may be another 50-100 points from here the markets could stabilise and after that again we could see buying resuming,” he says in an interview to CNBC-TV18.
When asked about his take on frontliners like ITC, which lost 5 percent on Monday, Shah continues to be bullish on the stock. Shah also recommends Reliance Communication which gave a fabulous return over the past 12 months and can give a 20 percent upside from hereon. “In the frontline space, Larsen and Tuobro (L&T) looks a good buy at the current levels, Reliance Industries is looking very interesting at Rs 807,” he adds.
Below is the verbatim transcript of Rajen Shah’s interview on CNBC-TV18
Q: How have you read the big fall that we have seen today? Is it just a healthy correction after a run up or is there more to it?
A: We had a very smart rally from 18000 odd levels to 20000. So, 1800 points of rally and now the correction seems to have set in. This is just a correction, I don’t think there are any reasons to worry. 300 point correction is a bit too much in one day, but certainly may be another 50-100 points from here the markets could stabilise and after that again we could see buying resuming.
Q: What would be your recommendation to your clients now? Would you be advising any buying on dips strategy or would you stay away till you see some stability in the markets?
A: There are plenty of stocks that moved up sharply. For example, United Phosphorous was Rs 110, it went up to around Rs 154. So, that is a 40 percent jump in just 2-3 months. There has to be some correction and we are seeing that stock react by about Rs 8 today to Rs 145 levels. May be if it comes down to Rs 140-142 levels, it would be a good buy. There are many such stocks, like Tata Global. It was at about Rs 120, rallied to about Rs 154 or so. It is down to about Rs 145-144. So, these are the stocks one could look at – stocks which were showing lot of strength prior to this correction and now are taking a breather. Those are the stocks which I would prefer looking at.
Q: Any word with the institutional desk at Angel Broking and what kind of institutional action have we seen in today’s trade?
A: I am not aware of the institutional action in today’s trade.
Q: Just one word on the frontliners, the way ITC cracked today over 5 percent, Bharti Airtel down nearly 4 percent, what would your take be now on the frontliners? How would you be approaching these big stocks now?
A: For ITC we continue to be positive. Bharti I would avoid. Instead of looking at Bharti, I would continue to be bullish on Reliance Communication which has given us fabulous return over the past 12 months and can give a 20 percent upside from hereon. In the frontline space, Larsen and Tuobro (L&T) looks a good buy at the current levels, Reliance Industries is looking very interesting at Rs 807. So, there are stocks which are looking good, at the same time there are stocks which could see some sharp knocks like Maruti Suzuki could correct some more, Hero Honda we could see going below Rs 1600, that is all possible but our bets in the frontline would be Reliance, Larsen, R Comm to a name a few.