MF Global doesn't see steep correction ahead, suggests buys

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MF Global doesn't see steep correction ahead, suggests buys

In an interview with CNBC-TV18, Rahul Shah, MF Global says, even if there is a correction in the market, it is not going to be steep.

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » RELATED NEWS Nifty may swing 100-250pts in next 6-8 sessions: CK Narayan Mkts to stay buoyant on strong eco data: Motilal Oswal AMC Emerging markets continue to be optimistic: Aberdeen 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

Q: Another set of stocks that has looked quite strong over the last few days is the telecom pack. After consistently making new 52-week lows, we are now seeing a trend where stocks like Bharti and Rel Comm are outperforming, Bharti in fact is now approaching the Rs 350 mark, and it's been quite a bit for rally for Bharti. Do you think it was just a bear market rally and it will start going lower again or you think the worst is behind it?

A: Come September- October, 3G roll out will start, so you might see some kind of positive news flow from that angle. You might see all the stocks where the rollout is coming may be RCom or Bharti moving up. If you have to have a play which is very strong then probably Bharti is one of the stocks, which has very high return on equity (ROE), very stable business model and a market leader you might see, that could be the reason the market is trying to play Bharti.

Also, in terms of relative valuation and the sector performance, if you just draw an excel sheet and try to find out, which sectors have not performed, may be this could be, with this news flow coming in might give you some kind of a play. This coupled with may be a short covering could give you a spike there.

Q: You are a long watcher of midcap stocks, quality midcap stocks, is anything looking still very good?

A: Yes, there area couple of stocks that our midcap research in the private client segment recommend. Escorts Limited is looking like a good stock with the monsoon almost close to perfection, looks like this stock with very strong presence in the tractor division and other businesses is looking right for a re-rating.

Other stock we like is Rs 700 crore- Rs 800 crore market cap company called JBF Industries these are couple of stock that we have been recommending to our clients now. We believe that you might get 35-40% appreciation in these stock, if held for a couple of months.

Q: Liquidity has this very interesting association with real estate and I think some would say there is frothiness in real estate prices already, stocks are not in that realm yet, would that be a big beneficiary of liquidity as it keeps flowing in?

A: It's very difficult, we like real estate companies, which are there in Bombay and we did play a pull back there. We would like to play Ceramic companies like Kajaria Ceramics or Nitco . We believe that, they are peripheral or ancillary industry to real estate. So, yes, if real estate is doing good, I don't know how much money would be made there, but there are few stocks where they predominantly dependent on oil and gas. With lower prices and the demand pull coming in, you might see some kind of a re-rating happening there.

Q: What's your call on metals? We have seen some sort of bounce back in Sterlite after it went to almost its 52-week low now at Rs 162, it approaches lows of Rs 145-146?

A: Since couple of days we have been seeing, even from the base metal prices copper was up yesterday. Today we saw the steel makers hiking the steel prices. Sterlite and Hindustan Zinc, both can be played for a pullback. Sterlite is typically 25% below the 200-day moving average, which also provides a kind of a cushion. Both can be played for 10% to 15% move from here.