Nifty cheap at 4700-4750, go for Maruti, M&M: Devang Mehta

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Nifty cheap at 4700-4750, go for Maruti, M&M: Devang Mehta

In an interview to CNBC-TV18, Devang Mehta, vice president and head - equity sales, Anand Rathi Financial Services said, the market has got very inexpensive at 4700-4750 levels and investors can go for stocks like Maruti Suzuki and Mahindra and Mahindra.

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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 Maruti Suzuki BSE | NSE 01/06/12 Are Mutual Funds betting on Maruti Suzuki? Other Stocks in this news Mahindra and Mahindra | Tata Motors | Jaiprakash Associates | Hero Motocorp | Bajaj Auto | Exide Industries | Amtek Auto | Bharat Forge |

Domestic market has witnessed much volatility since past few sessions; however, experts feel that this is a right time invest in the market. In an interview to CNBC-TV18, Devang Mehta, vice president and head - equity sales, Anand Rathi Financial Services said, the market has got very inexpensive at 4700-4750 levels and investors can go for stocks like Maruti Suzuki and Mahindra and Mahindra .

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: 4850 is holding on the Nifty. Do you think at least 4700 will be held as a floor on the Nifty in the near term?

A: I have always mentioned that 4700 to 5100 is a broader range, where our market can trade for an extended period of 1-2 months. The market gets very inexpensive at 4700-4750 levels. Valuations are quite compulsive and the PE band of around 13 times FY12 earnings market has not traded below 13 times, baring a few occasions, when there was something extraordinary happened in different parts of the world.

So, the Indian equity market has become attractive around that 4700 level and one should start looking for opportunities. However, nobody knows what will happen in the short term since the global situation is volatile.

Q: The disinvestment secretary was repeating something that the department of economic affairs secretary R Gopalan had said a week earlier that if they are not able to disinvest, they will make the companies buyback their own shares or they will ask cash-rich companies- the NMDCs to buy shares of other companies that are slated to make follow-on offers. Well, it's not been a done deal, but all these options are in front of the government. Will you start approaching the entire PSU space with a scare that their money is going to be used for purposes other than capex?

A: Yes because if there are contradicting statements coming from different members of the ministries, then it's a circumspect situation and how the government will go forward for disinvestment in such type of market remains a question for everybody. So, there has always been uncertainly in the PSU space, especially with OMCs (oil marketing companies). So, one should not nibble into such PSUs and remain in the pockets of strength, which the market has shown this time.

Q: After a long continuous fall we are beginning to see the semblance of support for Jaiprakash Associates. What's your view, your recommendation on the stock?

A: JP Associates will be our preferred pick because there is a huge correction in valuation as well as in price of this stock. It is looking very attractive at current levels since its infrastructure business is going very well over the last few years. Moreover, the cement volumes and the dispatch numbers from JP Associates have been exemplary. So, if one has a medium-to-long term horizon, JP Associates could fetch 150-160 type of returns in a period of one and half years.

Q: How would you approach Tata Motors, which is down by about 3% given its high exposure to the European zone? Is it a complete no-no or would you consider buying it at some levels?

A: Almost 70-80% of Tata Motors ' profit comes from JLR. Looking at the European situation and the global situation, there are companies like Maruti have now gone on-stream. We have also seen the festive demand being very good for M&M, Maruti, etc.

All these companies can do very well over this festive month as we know that Dassera and Diwali both fall into this same month October. So, their sales can be robust because of the festive season. So, automobile seems to be bottoming out somewhere near this rates. Maruti and M&M would be our preferred picks at this point in time.

Q: You are not impressed by Hero Motorcorp ?

A: Hero Motorcorp as well as Bajaj auto posted fantastic results. Selling 550,000 bikes a month is an exemplary situation. So this is a part of the consumption theme that Bajaj Auto and Hero Honda are defying. They are defying all market trends and it seems like interest rate scenario is not hurting them. So, Bajaj Auto and Hero Honda would also be our preferred picks.

Q: Commodities have started declining. One of our experts is recommending Excide because lead prices have fallen. Some people have turned positive on tyre companies because rubber prices have stabilised and sunk a bit. What's your view on the commodity space?

A: We like the auto ancillary space, in which Exide , Amtek Auto or Bharat Forge could do very well as we see the auto volumes being robust and the input cost pressure coming down.

Also read: Market looks attractive, to sustain 16K: Motilal Oswal Sec