Eye auto, banks, cements stks; avoid realty: Kotak Secs

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See what other experts are saying about markets See what FIIs are saying about the markets See what Udayan Mukherjee is saying about the markets BHEL BSE | NSE 25/05/12 Are Mutual Funds betting on BHEL? Other Stocks in this news Larsen and Toubro | NTPC |

Kunj Bansal , Senior Vice President-Portfolio Management Services, Kotak Securities , is positive on some interest rate sensitive stocks. He feels that auto and banking are a good buy at certain valuation levels. But realty is not on his radar. 

 

Bansal also likes cement space because he presumes that the raw material costing for such companies should come down. However, growth rates, the fear of oversupply still continue to be an overhang there, he said.

 

From a medium-term to a long-term view, Bansal is also bullish on stocks like BHEL , L&T and NTPC .

 

Excerpts from CNBC-TV18's exclusive interview with Kunj Bansal: 

 

Q: You were bearish some days ago - is the change in circumstances like the inflation peaking off and the outstanding in international relations adding up to enough reasons to buy?

 

A: I am not a bear but yes I was cautious on the market and there were reasons for that. In the last one and a half to two months, a lot of negatives are now passed, the majority of them was being lack of monsoon initially and the political uncertainty was one big factor and oil price too.

 

All three are now in the course.

 

Q: The key point is - would you buy now? This is a 20% rally from the kind of lows we saw in mid-July, that is from 12,500 to above 15,000 levels. Are lot of positives like monsoon, inflation probably peaking off, already discounted?

 

A: We have been buyers in last few days to a month or so. At the same time all the negatives are out from the market. Mainly if we look, there are two domestic factors, which are still having an overhang or could become an overhang in the market going forward. One would be the policies of the new Governor of the Reserve Bank of India related to interest rates. Second would be the September quarter results, which now we are very close to. Moreover, an overhang from the international markets still continues. It was only the last trading day of the market where we were exactly the same number of points negative, so I do not know if the market is living on a day-to-day basis.

 

Q: How would you play banking stocks currently, you spoke about the new RBI governor, a lot of market people are talking about inflation probably having peaked off, banking stocks have seen a strong rally from 3,800 levels, would you currently be a buyer?

 

A: Not immediately but yes banking sector and banking stocks are high-beta stocks, so they tend to participate first with the rise in the market and also tend to fall first with the fall.

 

Q: You are still not clear, atleast on whether you are a net buyer at current levels. If so in what stocks or sectors are you still looking at value?

 

A: We were looking at some of the interest rate sensitive stocks. In order of priority - auto and banking, realty is a still out of our radar, we are still not comfortable there. So these are the two stocks that we are buying in last few days to a month or so at certain valuation levels. Cement also is one sector, which we are looking for the reasons of the valuation and a presumption that the raw material costing for such companies should come down. The growth rates, the fear of oversupply and things like that still continue to be an overhang there.

 

Q: What about stocks like Bharat Heavy Electricals Ltd ( BHEL ), Larsen & Toubro ( L&T ) and National Thermal Power Corporation ( NTPC )?

 

A: Those are part of our core holding. So we are comfortable in such stocks for a medium-term to long-term point of view. In short-term, they will continue to participate with the market. But we are not too much worried about those short-term movements in such stocks.