Oct 20, 2012, 11.44 AM | Source: CNBC-TV18

Experts advise cautious trade; pick ITC from FMCG

Dhirendra Tiwari of Antique Institutional Equities feels TCS results should be in line with expectations and there should not be any significant problems. He also likes ITC in the FMCG space.

A sharp fall in the currency and profit booking led to a slump in the market on Friday. The BSE Sensex closed more than 100 points down at 18,682.31. The NSE Nifty points to end the day at 5,684.25.

Sudarshan Sukhani of s2analytics.com said there is a case for an aggressive trade on the long side with a clear stop loss at 5690. "If you are a short-term trader, you cannot have the luxury of waiting and finding out that your losses are becoming bigger," he cautions.

Short term traders must be disciplined, advised Sukhani.

Dhirendra Tiwari of Antique Institutional Equities feels TCS results should be in line with expectations and there should not be any significant problems. He also likes ITC in the FMCG space.

As far as the government's reform moves are concerned, Tiwari considers it to be positive.

Here is the edited transcript of the interview on CNBC-TV18.
Q: TCS comes out later in the evening. What is your view on what TCS might deliver this time around and any shocks expected at all or will it be smooth sailing?

A: Should be smooth sailing. It should not see any significant problems. We have seen some problems with Infosys but we have seen better performance by HCL Tech so I wouldn't expect too much of problem, lets see what happens.

Q: What's the call on ITC after these kind of numbers. Do you see a lot more upside on the stock?

A: We see some upside. ITC is the only FMCG stock we like. Essentially, the volumes have been good, margins had been pretty okay. There has not been any issue as far as performance is concerned.

Though, we generally feel that FMCG sector has seen a significant run up across various stocks and fundamentally we don’t see any slowdown per se. But the thing is that there has been a significant re-rating as well along with the earnings upgrades. We would believe that probably one should take a pause, look at the growth for the next few years for various companies but, within the pack I would assume that ITC is better placed. It can still give you 10-15% kind of upside in the next six months or so.

Q: What do you think Indian Hotels' plan to buy Orient Express means for their listed stock Indian Hotels?

A: Tata Group has been trying to expand their coverage to various parts of the world. This is something which is a positive development for the industry as a whole but, we will have to see how this develops and how things pan out over the next 3-6 months. We will have to wait for the details.

Q: What have you made of all the newsflow surrounding the entire telecom space, one with respect to excess spectrum charge, with respect to refarming and now auctions? Now we understand that Bharti, Vodafone and Idea have submitted their applications to bid in the November auctions?

A: On the reform front, most of the steps that the government is taking in various sectors are corrective actions, whether it is in the telecom sector or whether it is in various other sectors which were pending for a long time like insurance, retail and broadcasting. The progress is right and over a period of a year or so, barring the uncertainties of elections, we will have much more clarity regarding the path we are going to take as far as reforms are concerned.

I generally see that most of the steps that the government has taken, whether it is in telecom or other sectors in the last 30 days is very positive. It is going to drive market valuations in the future consistently. I think it is pretty positive.


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