See significant upside in mkt, largecaps to lead: Antique

Kirti Doshi, promoter, Antique Stock Broking believes most of the negative newsflow has been already priced, so some stability in market is likely post the recent correction.

In an interview to CNBC-TV18, Doshi said if the fall in crude prices continues and commodity prices also ease then we may enter into in a bull run for may be another two-three years. "We see significant upside in the Indian market from hereon," he said. Also read: Expect insipid nos in Q4, INR a big risk factor: Geosphere Last week, 34 out of 50 Nifty stocks touched 52 week lows. According to Doshi, the pain seen in large-caps stocks has bottomed out. "Largecaps may be nearer to stabilising and after a small consolidation; they will take the market higher from this level," he believed. Meanwhile, he noted that a large redemption was witnessed in the ULIPs in past few months as the five-year lock-in-period is over. "The insurance segment has seen more than Rs 15,000-20,000 crore of net outflows from equities due to this." Lack of retail participation continues to be a concern for the market. Large high net worth individuals (HNIs) are also keeping away from the market despite attractive investment options in the large and midcap space, he added.  On sectors, Doshi feels IT is heading for a large topping out in prices.

Below is the edited transcript of Doshi's interview to CNBC-T1V8. Q: It has been a bad run for the market. How much more pain do you see this year particularly for the broader market, the midcaps? A: Last June, P Chidambaram had taken over as the new FM and we moved from 4800 to 6000 in the first week of January. From there, the Nifty fell almost 11 percent, with the midcap and small cap falling around 22-28 percent. So, whatever the problem, whether it is India specific or company specific, most of the things are already priced in. Midcaps and small caps are near their lows. If one sees the breadth of the midcaps and small caps from last six-seven days, the number of lows has started coming down. On Thursday, out of Nifty 50, 34 stocks touched their 52-week lows. Most of the damage in the large cap is nearly completed and I strongly believe that we are somewhere nearer to the long-term bottom, We can see the prices of most of the midcap and small caps starting to correct from here. Even in the large cap, we may be nearer to stabilising and then after a small consolidation, the market will go higher from this level.  Q: What kind of consolidation do you see for the market? Subsequently, how much in terms of a revival? A: Things that affect the Indian companies and economy positively, will continue. If the fall in crude continues by USD 4-6 more and the commodity prices continue to slide lower, we can be entering into very large bull run. In another two-three years, we maybe able to see a significant upside from here in the overall market and specifically in large names which have corrected significantly in last one-and-half months.

Q: The one pocket which has held out going into earnings is IT. Would you start getting cautious or do you think earnings will hold out the optimism that we have seen over the last one month? A: Four months ago, most of the stocks were trading below 28-30 percent from here. So, we are nearer to the top end. Some small IT companies may out-perform but going forward from here, IT is heading for a large topping out in the prices. Q: Do you think there will be enough appetite to absorb some of these divestment issues that are going to hit the market soon? Or do you think that is going to cause further pressure on the market? A: There have been three announcements for raising Rs 40,000 crore. One was the Specified Undertaking of the Unit Trust of India (SUUTI) through ITC, Larsen and Toubro (L&T) and other stocks which they have in special undertaking schemes. Another undertaking is BALCO and Hindustan Zinc who are looking to sell. The third is a divestment. So, this all comes to Rs 40,000 crore and we still we have a full year to go ahead. _PAGEBREAK_ Plus, the Government announced last week that they may do some buy back of Coal India or National Thermal Power Corporation (NTPC). So, I don't think there is going to be too much pressure in the market and we are expecting that all is going to happen this month only or in next month. Once things will move forward to BALCO and Hindustan Zinc divestment or SUUTI divestment, I don't see any issues. All these companies which are offering are available at almost their five-six years low. So I don't see much issue on that.

Q: How is the market otherwise in terms of companies wanting to do qualified institutional placements (QIPs) or Institutional Placement Programmes (IPPs)? Are they being able to do it successfully or are you sensing that there is lot of stress even on individual money raising programs? A: If the company has good quality, I don't think there will be an issue. In the last one and half month, more than 15 Qualified Foreign Investors (QFIs) have gone through and most of them have got very good response. There are some three-four IPOs also which have got reasonably fair response. So, if the quality is good and the valuations are in favour of the investor, I don't think there is any issue of raising money in the market.

Q: What is the problem with some of these public sector companies, stocks like National Mineral Development Corporation (NMDC) which have done so badly after the offer for sale (OFS). All the stocks like National Thermal Power Corporation (NTPC), National Aluminum Company Ltd (Nalco), Rashtriya Chemicals and Fertilisers (RCF) have actually lost money for investors who have walked in atleast in the initial days?
A: At the time of this divestment, the government spelt out in the second week of March that whichever large company is sitting on huge amounts of cash, they will either give large dividends or they may be asked to do capex. Neither of these things have really materialised so there is a disappointment on both fronts. That is why the stocks like NTPC and NMDC are continuously sliding. Plus because the offering was so large, so there are some momentum players who have invested into these companies. Also, because things are not happening, they have offloading. But, these are the companies which have great value so I don't know what can happen to this within next 15 days, but those who have capability and have a view to hold these companies for two-three years, I am sure they will create huge assets. Q: The other problem for these midcaps has not just been the lack of buying interest but the technical problems in terms of stocks that could have been kept as collateral margin call pressures. What is your sense of whether that has got cleared out in the past couple of weeks?
A: There are two segments of the midcaps- one is operator driven companies and then, there are others which are leveraged. So, the companies which have got punished by 70-90 percent are because of their balance sheet issues and the concentrated holding of few selected people.
 
What has happened in last six months is that there are many corporates who are now clearing their balance sheet, selling their assets. This list of companies include DLF, Pantaloon and other companies like Suzlon, GMR Infrastructure, GVK Power & Infrastructure and United Breweries Group. There are so many companies which are now taking real steps to deleverage their balance sheets. They are figuring which are the assets that are not really creating a good business for them. They are in the process of hiving off or reducing it in some manner. So, all these companies who have raised money or are in the process are going to be one of the companies who might create further strong investment and they will give huge returns in the coming time when things will improve from here.