Do you need to rejig your portfolio?

Sanjay Dutt of Quantum Securities says he would play oil and gas, banking, and select FMCG space for a 300-400 point rise in the Nifty, while Ambareesh Baliga of Karvy Stock Broking advises investors to hold cash and use any correction to buy on dips.

Shift to silver:
Dutt advises investors to allocate a part of their portfolio to silver. "I would like to take money from gold and move it into silver because there is a good trade playing out there. Also, there could be a good amount of profit there in the next 12-18 months."

Jump Ship:
Shipping stocks have been in the limelight of late because of run up in the Baltic Dry Index and hopes that freight would increase with the recession abating. However, Hemen Kapadia of chartpundit.com recommends booking profits at current levels. "Shipping looks good, especially Shipping Corporation, Great Eastern, and Mercator Lines in that order. But the markets appear wobbly and despite the anticipated bounce from an intraday point of view, we are going to see further pressure. Keeping that in mind, I would prefer to book profits."

Book profits now, says Baliga. He feels it is totally misplaced when people buy stocks just because the Baltic Trade Index is moving up. "The Panamax and Supermax Index within Baltic has hardly moved. The Baltic index has moved up because of conditions in Chinese ports. Rates have actually moved up from USD 30,000 to USD 90,000. But the longer-term charter is still stuck at USD 19,000 levels. There is no correlation of the Baltic freight index with Indian shipping companies, especially Great Eastern Shipping or Mercator Lines. But inspite of that when you have these stocks moving up 20-30% in such a short while, I think it is prudent to book out."

Add real estate?
Buy real estate is Dutt's call. "We have seen a good appreciation of 30-40% in residential real estate. It is a good time to start looking at commercial real estate because they give reasonably good rental returns. The commercial market would start to pick-up in the next six months. It might be a good contrary trade at this point in time to increase exposure to some real estate."

Baliga cautions against investing in realty stocks. He feels real estate has been more of a traders bet for quite a while. "These stocks are quoting much beyond their net intrinsic value. So, when you see some amount of weakness in the market, it is quite natural that people will get out of high beta stocks. Clearly, real estate is one of them. In case the markets break 4-5% in the next couple of days, you could actually see most of these stocks falling by 10-12%."

Satish Betadpur, CFA, Global Research Director, Independent International Investment Research Plc, too is not bullish on realty stocks. "It’s a late cycle play at this point. These stocks have also run up in the near-term. So, the supply-demand on the stocks with 14 IPOs in the pipeline don’t look very good for fundamentals. The end user demand for real estate is picking up. But at the same time it is very price sensitive. It is not a volume game yet and real estate developers are trying to price higher which affects volumes."

Exit midcaps:
Baliga feels this is not the time to look at midcaps and smallcaps which are moving around. "There seems to be a lot of interested activity in those spaces. When the market comes down, these stocks will fall much faster than largecaps. At present, we are not really looking at too many smallcaps, midcaps. We have a couple of picks which we will be buying at lower levels."

Infra a long-term bet:
Quantum Securities' Dutt is bullish on infrastructure companies from a medium- to long-term perspective. "We are very bullish on some of the mid-tier companies. But in the short-term, I would play a reverse trade there." Betadpur too shares Dutt's view on the sector. "Dips are good times to buy into infrastructure. It is a pure India story, it will pan out well over the mid-term, so these are stocks that we would buy on dips."

Power your portfolio:
Sanjay Sinha, CEO, DBS Cholamandalam AMC, says power stocks can act as defensive plays in the portfolio. "Their returns are quite regulated. In a market which is quite choppy, power stocks can give you incremental growth year-on-year, but they may not give you fantastic moves either side."

Banking on banks:
Dutt is also gung-ho on the banking space. "Some of the large banking plays, both in the private sector and the public sector, would add about 5-10% from current levels."

Invest in IT:
Sinha says the sector could outperform over the next 12-24 months. "While we might see some appreciation on the rupee front, volume growth would more than compensate for whatever we will see as a setback on that count. We still cannot say with absolute certainty that the US is out of a recession and that we may not see a double dip there. In the events of the last one year, we have not seen any significant erosion of order flows to the IT companies. Going forward, why should we be so pessimistic that the second leg of that double dip would be as severe as what the first leg was and that IT companies would see the worst part of that and not probably gain from there. When you build a portfolio, not all bets can be for the short-term objective, you will need to take some medium- to long-term views."

Betadpur too is bullish on the IT space. "We have held on to largecaps with a smattering of midcaps. If we do have a 15-20% type correction, we would be positive on this space."