Global cues to limit downside; buy on declines: Edelweiss

Nischal Maheshwari of Edelweiss Securities tells CNBC-TV18 that the market will be propped up by positive global cues, therefore limiting the adverse impact of the RBI credit policy.

The win of Greece’s pro-bailout New Democracy party has global markets buzzing, and this exuberance will help restrict the downside for the Indian market, says Maheshwari. On this positive note, his advice is to buy on declines, especially banking names ICICI Bank and Axis Bank. He also has a buy call on consumer stocks, cable names and two-wheelers from the auto space. On the flip side, Maheshwari has an avoid call on infrastructure names. His advice is to wait for policy action from the government before venturing into that space. Below is an edited transcript of his interview with Reema Tendulkar and Sonia Shenoy. Also watch the accompanying video. Q: Has the market reaction to the disappointment from the RBI already played out and how do you expect us to move from hereon? A: The market was expecting a repo rate cut, but that has not come so that market has reacted, mainly the interest rate sensitive sectors. Having said that, I think the reaction cannot be much larger from here on because there is some positive change as far as international markets are concerned. We have got a Greek election result which was positive, and till the EU summit happens I think we have some positive news on the horizon. So locally there was disappointing news, but I think internationally there is some positive news. Q: If you do have a positive bias to the market, what would you do to the banks now? Would you buy into the dip that you are seeing, and if yes, which banks come to your mind? A: I think private sector banks definitely have a much better say in this current scenario, whether it is in terms of their valuation vis-à-vis looking at their asset quality. ICICI Bank and Axis Bank definitely take away the cake there, but we also like State Bank of India (SBI). So I think banks look interesting at these levels basically on dips one should be accumulating these banks. Q: How would you approach the capital goods and infrastructure names then, would you also be looking to buy them? A: I would wait for a while because I think the government is under quite a bit of pressure after the 5.3% gross domestic product (GDP) growth and the negative index of industrial production (IIP) number for a long time now. I think some policy action should happen. I would wait and see what kind of policy actions are happening before venturing out to buy some of the capital good names. Q: Would you just want to buy into only banks or are there other pockets that you would want to enter into with a trading horizon in mind? A: I would go and look at some of the names which have reacted, maybe media. Something like Zee TV looks interesting at these prices. Both Dish TV as well as cable company Hathway looks interesting at these prices as well. Some of the consumer names also look interesting, like VIP, given that the rupee is now stable. From the autos to a certain extent maybe a two-wheeler is what we would be interested in looking at these prices.