Expert advice: Stocks/sectors that can fetch you gains

Here are the expert views on various stocks/sector:

On JSW Steel and various stocks:

Mavani says, “Two-three thing that I would like to talk about when it comes to investing and managing money. Firstly, whatever investment we do has to give us the comfort and most importantly and hopefully a good night sleep. Commodities by inherent nature are volatile and it is that volatility which often is actually the reason for the opportunity in the space, both in the shorter as well as the longer horizon. In the shorter horizon, they give tremendous trading opportunities. On the longer horizon, one is riding on the global economy and the growth and consumption of steel, especially in this case. What I sense from the question and the conversation is that volatility, which happened post 2008, is something which the investor, I believe, is not very comfortable with. So, in that sense, even if the stock is poised for higher levels from these levels, I am assuming one scenario if that every thing is fine in the global economy, everything is fine with China, which has been driving demand for steel and all metal commodities last few years, assuming everything is fine this could go up higher. But if you are fundamentally not comfortable with the volatility, one should just book profits and move on to something which is more steady, consistent and sustainable.”

Mavani further says, “As far as consumption as a theme in India is concerned, there is a huge opportunity. Although last one year we have seen a huge rally, but nevertheless having said that, there is still a huge opportunity in the domestic consumption space, where the volatility in earnings is far less than the volatility that you would find in international exposure stocks like steel and commodities and so on and so forth. That’s the larger theme. An extension to that theme is the domestic gas consumption sector the likes of Indraprastha Gas or a Gujarat Gas . Gujarat Gas more so gives me tremendous comfort, that’s one area one can look at. Paint is a sector, which is sort of below the radar, hasn’t come too much in limelight, but tremendous opportunity over there. Although the stocks have already run up, but Kansai Nerolac Paint or Berger Paint look still decent even at these prices. Historically, they have not had very large volatility across cycles and have been steady long term investment bets. More so if I were to extend that, Zodiac Clothing in the small cap space is something which looks attractive.”

Bhambwani says, “It pays to be cautious at any given point in time about the market. I would agree that JSW Steel has appreciated sizably after the investor has bought it. I think what we are seeing on the charts is resistance coming in at the levels of the December 2007 levels, which is close to Rs 1,400, which is where we are at currently. There is a fair possibility, fairly good possibility that JSW Steel will breakout above the December 2007 highs of Rs 1390 levels and probably head higher. But I would agree with fundamental analyst that the volatility is something that is a personal call you have to take. Personally, you have to basically balance out not only the risk-reward ratio and absolute financial numbers, but the comfort level that the profit is likely to come at. From here onwards JSW Steel is likely to be a lot more volatile as compared to a SAIL or a Tata Steel . Therefore, booking say part profits say 40% to 50% money of the table and switching it on to Tata Steel would be a better idea.”

On HDFC Bank :

Mavani says, “Talking of HDFC Bank in particular as well as in the banking sphere, I mean the investor is holding on to one of the best banks around. A bank which has got the best net interest margins substantial cushion from free income, growth which has been on an increasing basis, as its got larger, it has continued to maintain a 30% plus growth in both interest income as well as in terms of profits. Non-performing assets (NPAs) have been most minimal; it’s got probably return on equity which is also in our top quartile across banks. You can’t have a bank in India better than this. At least from the available universe, there isn't any which come close to HDFC on the operating and fundamental parameters. Valuation has been rich. But historically, when we look at last ten years, HDFC Bank has always traded at a premium valuation. Even now it’s about 4 times book. But since the investor has got the patience to holdover the long-term, he can continue to hold. I would rather add to that and say this probably can be a permanent holding in lot of long-term investors portfolios.”

Bhambwani says, “Coming to HDFC Bank specifically, I remain optimistic on this counter. I feel as long as this stock is remaining above the Rs 2,180 levels, the momentum remains positive. On the upsides, I would expect something like Rs 2,750 odd levels in the coming three-four quarters time frame.”

Bhambwani further says, “As far as the PSU banking space, I think SBI is towering above the others, head and shoulders above the others in terms of relative performance. Having said that, I don’t think I would buy at the current valuations and current prices. I would look at Rs 2,875 to Rs 2,900 as entry levels on fresh positions, if I am not already holding it. If you are basically holding existing stock in your portfolio, I think entering even at current levels would make sense, but your quantity should be very small, so your net average price does not really rally too much. Of the two, I would favour HDFC Bank relatively, between HDFC Bank and SBI.”