Watch out sugar and tea stocks: Jagdish Malkani

Excerpts from Closing Bell on CNBC-TV18 Watch the full show »

Tea stocks along with sugar stocks are talking points of this up move. Malkani thinks that even though most of the tea stocks have run up a lot, the tea story is far from over. He also sounds bullish on the sugar story.

Excerpts from CNBC-TV18's exclusive interview with Jagdish Malkani:

Q: Hindustan Lever is at Rs 234. Where does it will go next?

A: It’s been a great performance from the company after a long time. Margins are little bit under pressure but it has given an elusive topline growth. It is slowly but surely headed up to Rs 250 – 280 and possibly even up to Rs 300.

Q: Your thoughts on Radio Mirchi listing? Entertainment Network India is at Rs 270. What would you do?

A: It’s not terribly well but certainly a rich listing. Prospectus, advertising revenues are good. But it is in a competitive space. I would scalp it. I was lucky enough to have reasonable holdings in the IPO. It is fairly richly priced.

Q: Is market looking a little sluggish now?

A: The classic F&O correction happened yesterday and today. Probably one will see some more bloodletting. Till Budget, this is going to show some new highs. The sector rotation will go on. At some stage we are going to have a nice 500 – 1000 Sensex point correction. As of now, the market is still full of liquidity.

Q: Anything at these levels that you still buy aside from Hindustan Lever and ITC?

A: The sector is still attractive. But there is nothing cheap anymore. Hindustan Lever, ITC and possibly Gillette India are richly priced. My preferences would be in that order only.

Q: Tea stocks have cooled off a little bit. Do you think it’s just consolidating after rise?

A: It’s been a breathtaking rise. McLeod Russel , Williamson Tea , and Jayshree Tea have risen by 60 – 80% in barely six or seven trading sessions. Couples of them are playing catch up. I track  Goodricke Group  and which is on circuit. I think that has some catching up to do.

Overall, maybe they have run up a little ahead of themselves. So there will be some consolidation. But the story is far from over.

Q: Does sugar look good for more because there were signs of that yesterday but they have gone soft in today’s trade?

A: Sugar story is far from over. It is consolidating. There is little fear of political noise coming out. But it is still a bullish sector. Maybe some money will come back into better stocks like Balrampur Chini .

Q: What do you think of Bajaj Auto and NTPC? 

A: Bajaj Auto is a great company and a great stock. The move in the last two-three sessions also has been breath taking. But the market is buzzing with the old talk of the split. Two companies are clearly on the anvil: the investment company and the motorcycle company. Some amount of unlocking of value will happen. I would wait for dip to get in.

NTPC  is a good stock but can tire one out in this mad bull market.     

Q: Do you track Cummins and Colgate?

A: Cummins is an excellent stock.It has given excellent performance recently. The stock is heading up after a long lull.

Colgate had an excellent quarter. It was the first to lead again in the MNC & FMCG pack. Hindustan Lever results again have helped it to take a leap forward like ITC. So this one is again headed upwards for Rs 400. The whole FMCG pack is looking bullish. I would still put Hindustan Lever on my buy list rather than Colgate. It is because Colgate has had a huge run-up, whereas Hindustan Lever has done nothing for several years.

Q: Any disclosure to make about the stocks that you spoke about today?

A: I have Hindustan Lever, Goodricke Group and Colgate.