Gold prices have seen an uptick and prices seem to be on firm footing; hence, gold financing companies like Manappuram Finance, Muthoot Finance are looking attractive.
With gold prices seeing an uptick off-late and firming up at current levels, gold financing companies like Manappuram Finance and Muthoot Finance are looking attractive, Anita Gandhi, Whole Time Director at Arihant Capital Markets, said in an exclusive interview with Moneycontrol’s Kshitij Anand.The crude price shock has taken equity markets by surprise. If crude stays above $71/bbl, it would spell trouble for the economy as well as oil marketing companies?
In the near-term, crude does not seem to spell trouble for the economy. However, if it remains at an elevated level for long, it can certainly have an impact.
At present, inflation is in a comfortable zone. There have been new oil finds in Bahrain. We are also hearing of additional supplies from the United States. In all likelihood, crude will consolidate at current levels. Oil marketing companies (OMCs) will certainly get affected as their business models are directly linked to oil prices.
Any geopolitical risk is a sentiment dampener. However, India's demographics, its big population and rising demand still make it an attractive investment case, especially after the recent market correction post the budget. From that perspective, India is slightly better placed among various countries across the globe. However, in such situations, the upside will get capped.
Domestic institutional investor (DII) inflows have played a vital role in the market rally, especially post demonetisation. Between December 2017 and January 2018, foreign institutional investor (FII) flows were negative and DII flows were robust.
It really helped absorb FII selling. The market rally continued till the end of January. Post a correction in February, equity returns in March turned negative.
A number of investors booked profits in March due to long-term capital gains (LTCG). In the entire process, equity markets underwent a 10% correction. With relatively better macros and 10% correction in indices, valuations are now at realistic levels.
If we see an earnings uptick in Q4, we may see FIIs returning back to Indian markets. So, the reduction in DII flows may get counterbalanced by FII inflows. However, it will depend upon the actual results of companies.Any stock/sector which might emerge as a dark horse in FY19?
Gold prices have seen an uptick and prices seem to be on a firm footing. Gold financing companies like Manappuram Finance and Muthoot Finance are looking attractive. The capital goods sector is also attractive.
Among largecaps, we like Grasim Industries and Century Textiles. Manufacturing has also shown an improvement in March PMI data. Hence, manufacturing is expected to pick up further. The footwear industry is also on a strong footing.There were many quality stocks which corrected in the last 2-3 months thanks to global volatility. Any top 5 contrarian stocks which investors can buy at current levels and why?
OMCs have corrected quite a lot in the recent past. From a contrarian perspective, these stocks look attractive at current levels as in all likelihood, crude oil prices will consolidate or correct from current levels.Do you think March quarter earnings could be as strong as consensus estimates? What are your estimates for FY19?
In all likelihood, March earnings will be in line with consensus estimates. For FY19, we expect a 10-12% rise in earnings.What is your assessment of the banking situation? It looks like new skeletons are tumbling out of the closet every day. Do you see PSU banks as a potential long-term buy at current levels or should investors stick to private sector banks and NBFCs?
It is a bit difficult to take a call on PSU Banks. In March quarter, most of these losses will be booked. They are trading at cheap valuations.
Investors with a high-risk appetite can take some exposure there. Private sector banks are certainly looking good. However, valuations are expensive.Any secular story which you are tracking? Are there any businesses which are trading at a fair price as great business at a good price are seldom seen?Largecaps are trading relatively cheap as compared to midcaps. However, in absolute terms, markets are still a bit expensive and will depend upon earnings growth. I will comment on stock specific ideas post the results.