Apr 17, 2013, 01.28 PM | Source: CNBC-TV18
Ajay Bodke, head- Investment Strategy & Advisory, Prabhudas Lilladher prefers private banks like ICICI, J&K and Yes Bank over public sector lenders.
Ajay Bodke (more)
CEO & Chief Portfolio Manager(PMS), | Capital Expertise: Equity - Fundamental
Gold prices have plunged more than five percent in the past two days, Bodke expects gold finance companies to remain under pressure till gold price decisively breaks 200-day moving average (DMA) of USD 1,440-1,450 per ounce. The broking firm is cautious on gold finance.
Meanwhile, he remains positive on the IT sector.
Below is the edited transcript of Bodke’s interview to CNBC-TV18.
Q: What is your pecking order in IT after looking at the results of Infosys and HCL Tech this morning?
A: We continue to be positive on Infosys. We also like Tata Consultancy Services ( TCS ) and Wipro . HCL Tech results also have been more or less in-line with our expectations. We were expecting around 22.6 percent EBITDA margins.
The company has delivered more or less similar EBITDA margins. They beat estimates on the bottom-line front and their other income as well as the cross-currency effect has played a part. Oherwise, both on the top-line as well as on the EBITDA front, the numbers are very much in-line with our expectations.
Q: The big resurgence has come in the private sector banks. From there, which one do you think will likely be the best performance this quarter?
A: We continue to be positive on ICICI Bank among the large caps in private sector and on the midcap side we are positive on Yes Bank as well as J&K Bank. In case of public sector banks, the market will wait and see, atleast a quarter or so, on how the non-performing asset (NPA) shape up.
The net interest margins (NIM) also are expected to remain under pressure. Deposit rates are not really coming off. Some of the public sector banks have upped their deposit rates. The deposit rate growth has lagged the credit rate growth and the fee incomes also are yet to look up. So, we will continue to weigh on the side of private sector banks in general and ICICI in particular and Yes and J&K Bank in particular in midcap space.
Q: It has been a terrible week for gold finance companies so far. Would you expect to see more pressure on some of those faces?
A: Yes, because the technical analysts are predicting that we have to watch the 200-day moving average (DMA) for gold which is around USD 1,440-1,450 per ounce. Unless gold is able to decisively break that, one can expect sort of pressure to continue on gold prices which obviously is not going to spell too good for some of these gold finance companies. So, I think we would be very cautious on almost all these names in gold finance.
Q: Which of the oil sensitives do you like the most if you had to play this fall in crude prices?
A: Oil India and ONGC are the ones that we prefer. We also like Cairn India although in case of Cairn, the reasons why we like it are essentially because of the new oil discoveries. That’s the reason we prefer Cairn. Simply from point of view of falling oil prices, ONGC and Oil India are our preferences.
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