Markets to remain subdued today: Choksey

Excerpts from Bazaar 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 Nifty BSE | NSE 01/06/12 Are Mutual Funds betting on Nifty? Other Stocks in this news Hindustan Motors | Finolex Cables | Mahanagar Telephone Nigam | Tata Motors | Unitech | Mahindra Lifespace Developers | Ashok Leyland | Balrampur Chini Mills | Sterlite Technologies | Maruti Suzuki India | LML |

Q: You track some of the cable stocks as well, any of them that you would buy at these levels now?

 

A: I think Sterlite Opticals is showing good amount of promise at this point of time. There are a couple of reasons; we have seen the MTNL and Aksh arrangement yesterday. Most importantly, fibre optic demand has started growing as far as the country is concerned because of the IPTV and CAS implementation, which is now going to be the new driver for this particular line of activity.

 

Most of these companies are having sufficiently built in capacity, the downward trend into fibre optic has ended possibly in the world market. The entire world market space is looking quite good. Both these companies, Sterlite Optics and Finolex Cables are looking quite promising on the fibre optic cable side. So they are looking interesting from an investment point of view.

 

Q: What would you do with the two sectors where there is not so much optimism right now; sugar and metals?

 

A: According to me, it is a temporary phenomenon that people are looking at commodity prices on a daily basis and then they decide about the preference for stocks in the portfolio. In my reading, sugar companies are going to be riding on a larger volume, so profits would be higher. In case of Balrampur Chini Mills also with the results, we saw that they are carrying sufficient amount of inventory in the last quarter, which is going to give tremendous amount of income in Q2 when they announce their results.

 

Same is the situation when the higher production takes place, people are going to make money on volumes and not on price. So to a great extent, sugar is a long-term story. I think the short-term impact maybe due to prices, which are slightly soft at this point of time due to various reasons. But the fundamental views have not changed as far as the sector is concerned.

 

Q: Do you track Siemens and Hindustan Motors, they are in the news this morning?

 

A: Siemens of course is a known story and definitely it is going to be continuing as far as the business scenario is concerned for the next two to three years with a large order book position and the visibility as far as earnings are concerned. Though the relative P/E ratio for this particular company is relatively higher at this point of time, I have said that when the company is growing at 45-50%, that particular ratio is justified.

 

Hindustan Motors is largely on a real estate story. There is nothing more to add at this point of time, but the company's operations have turned around, which is going to be interesting to watch in the coming quarters and probably for a year.

 

Q: Is that what you were expecting; another quiet kind of affair before the action picks-up again next week?

 

A: Friday would normally remain a bit subdued, particularly after the run-up in last few days and today it is going to be more subdued. But importantly, if one has to look at I think 11,330 on the Sensex, if it holds then we are going to see an interesting market once again in the next week.

 

We believe that there are enough positives for markets to go up apart from those negatives, which are coming up because of the flood  related effect. But enough positives will take the market up next week. So one will have to wait and see maybe next week, when markets will see more than 11,500 levels, one will see how it reacts thereafter.

 

Q: Would you buy LML at Rs 19?

 

A: Not really. We don't track it particularly and at the same time, the focus is largely onto companies like Bajaj Auto , where the growth path is very clear including the domestic as well as the export market. So obviously, the preference is more onto the large cap Bajaj Auto kind of companies.

 

Q: Any thoughts on realty plays like Mahindra Gesco , Unitech , etc?

 

A: It would be selectively looked at. Probably, one will have to look at the projects, which are going to come up and which are going to result into the financials in some of the coming quarters, that would be our call. As such we are not tracking something very closely at this point of time, given the kind of uncertainties as far as the pricing part is concerned. But really speaking, we would like to see it more on the project delivery basis, than otherwise.

 

Q: What is your pick on the auto front right now?

 

A: I like Maruti Udyog at this point of time, not because the fundamentals are backing this company and at the same time the stock is due for some amount of rally. So purely from a short-term point of view, Maruti is good. Investment recommendation continues to be in Bajaj Auto and Tata Motors.

 

Disclosures:

 

Some of the stocks that we have discussed, I think, I personally as well my clients maybe holding some position and investments in them.