 Weakness in auto to continue for 1-2 mnths: EmkayPublished on Mon, Jun 11, 2007 at 10:39 | Source : Moneycontrol.com Updated at Tue, Jun 12, 2007 at 10:53 33505 Investors following Aban Offshore. Share this News with them.
Damania expects IT stocks to consolidate at these levels. Excerpts from CNBC-TV18's exclusive interview with Anish Damania: Q: What's your call on the market for the rest of June? A: We should consolidate at these levels for some more time. We have seen a run from about 3,700 to 4,200 on the Nifty. I think this is consolidation time and you will see minor corrections here or there. Overall, the trajectory looks decent to me but it should see a consolidation in June. Q: You got a house call on DLF and what are you telling your investors or clients to do? A: We do not have a real estate analyst and generally we do not have view on real estate companies. Our Head of Research has met with DLF officials and he feels that it might be a soft issue with a small premium on listing. We will take a view after the stock lists. Q: What do you expect to see by way of consolidation for this market because trading has been quite volatile? What sort of band would you set out for it? A: We feel it could trade between 4,150-4,300 on the Nifty. Q: What have you made of the pummeling that the entire auto sector has got and do you think the worst is in the price now by way of stock prices? A: If we look at the auto sector numbers, which come out every month, there is always a lot of visibility in terms of what numbers are coming out this month. To that extent you try to price in a little bit in advance. The weakness might continue for another two-three months in auto numbers. It is not that the demand is weak, it's just the expectancy that interest rates will behave in a particular fashion is leading to a postponement of demand especially in cars and commercial vehicles. So, stock prices might remain a bit weak for the next one-two months. Q: Do you have buys out on any midcap or largecap pharmaceutical stock at this point? A: We placed a buy on Ipca sometime back, so that's one stock where we are bullish on. We like the midcap pharma space and our research is looking at doing more notes on them. Q: Why do you like Ipca Labs? A: The company's domestic growth has been stronger, its margins are good, and it is expanding its reach into other markets, so overall there is good growth. We are expecting about 25-30% CAGR over the next three years in its profits and it's reasonably valued at about 16 times. Q: Do you have coverage or a call on any of these construction, infrastructure stocks with a buy rating now? A: We have a buy on Hindustan Construction , IVRCL and Subhash Projects & Marketing . Q: Two sectors that have looked quite weak off late are cement and FMCG. Do you think it makes sense to search for value in any of these two sectors or do they deserve to be where they are? A: I think cement probably deserves to be where it is. We have a negative view on cement. The current things which are going on with respect to the government sort of telling manufacturers to hold on to their price line and not to increase it, or any benefits which the government provides to pass it on to the consumers, has happened, so in terms of the price line it is holding up. Within a year-and-a-half or two we will see large capacities coming up and we feel that cement stocks still have some scope to underperform. Q: Would you use this bounce in IT to lower your positions or do you think there is a much more meaningful bounce left in IT stocks after their recent underperformance? A: I think IT stocks would consolidate at these levels, especially Infosys and Wipro . They have had the maximum fall in the last two months by about 16-17%. Probably, over the next one-and-a-half or two months, one should start looking at Infosys and Wipro. As Q2 and Q3 results come in, you will start seeing their QoQ growth comeback once again. Q: Post this run-up in midcaps, are there any new stocks on which you would initiate coverage and buy even at these levels from the midcaps? A: In terms of initiation of coverage, we recently brought out a note on Ipca Laboratories. That is one thing which we are pushing. In the past, out of the notes which we have brought out, I like Monnet Ispat and Garware Offshore . We like the entire offshore industry, including Aban Offshore and Granules India . Disclosures: It is safe to assume that my clients and I have investment interest in the stocks/sectors that have been spoken about.
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