Dec 12, 2012, 04.18 PM IST
Raamdeo Agrawal, joint MD of Motilal Oswal Financial Services believes the market is in an optimistic frame of mind and he sees more upside from its current levels in the next one to two months
The recent buzz about IPOs, whether it is with regards to the latest CARE issue or the Bharti Infratel one, the market seems to be on a high and stock buying is back. Raamdeo Agrawal, joint MD of Motilal Oswal Financial Services believes the market is in an optimistic frame of mind and he sees more upside from its current levels in the next one to two months riding on positive announcements from the government and the pick up in interest in the primary and secondary market offerings.
At the moment, NMDC's issue also looks attractively priced and therefore, Oswal advises investors to subscribe to the IPO. As far as the third quarter earnings are concerned, he does not expect significant surprises. The Reserve Bank’s monetary stimulus is also likely to aid earnings growth and this would support the market rally, he added.
Besides, Oswal feels stocks like ITC and TTK Prestige has been the biggest wealth creator in the last five years. He opined, their business strategy and strong franchise have comprehensively led to their outperformance. Moving ahead, he believes consumer facing niche franchises are most likely to outperform. However, companies like Bharti still faces significant challenges in Africa, he noted.
Here is the edited transcript of the interview on CNBC-TV18.
Q: What is your view on the market? Do you think enough is done for the year or do you see the market moving higher in the next couple of months?
A: The sense is that the market is going to move higher because if you look at the market after the TV18 issue, it was around that time and now with the CARE issue, there is suddenly a lot of buzz about buying stocks and applying into IPOs. I think the mood is very good and I do not see any major disappointments at this juncture from any side. Earnings for the quarter is over and Delhi is making more announcements in a positive direction. My sense is that we are likely to move a little higher in the next one or two months.
Q: What do you make of the NMDC offering? Does it look attractively priced?
A: It looks absolutely attractive. It is monopoly and we are now almost falling short of iron ore and we being a huge exporter, our companies are becoming dependent on iron ore. I think government will be happy to give incremental licenses or leases on the iron ore mines of this company. So at six to eight times, it's an attractive offering.
Q: How about the Bharti Infratel issue?
A: It is much more asset incentive kind of an offering with an assured business and good infrastructure for the telecom sector. Of course it is not going to be a multibagger kind of a company like the way Bharti was offered at Rs 45 and in the next three years it went to Rs 1,000-1,200. It is not that kind of a thing because it is not a network with the power of almost unlimited capacity which benefits a company. It is much more asset intensive, so the gains should be modest but it is a very sound and assured business offering.
Q: Some people point out that the market could be setup for a bit of a shakeup come January and there will be disappointments in the earnings season again, is that you premise as well that January may see some correction based on earnings disappointments?
A: I do not know how the markets will behave but, I do not see too many surprises in the December quarter earnings, that is the ones to be declared in January. So I do not see any reason for a disappointment between September and December and do not expect any major thing to happen. I do not see any major hiccup in the earnings per se but, markets could be influenced by many other factors.
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