What is Networth's view on HDIL, Rcomm, SKS?

Prakash Diwan, Head (Institutional Business) of Networth Stock Broking, in an interview with CNBC-TV18's Sonia Shenoy and Anuj Singhal, spoke about his reading of the market and gave his outlook for several stocks.

Below is the verbatim transcript. Also watch the accompanying video.

Q: Could we stabilise at 5500 level? Given the fact that crude has moved lower, how much of a long run respite would the markets take from this?

A: Essentially, we will have to see whether the respite in crude is sustainable or not. Depending on that we will distinctly see markets easing-out out of this stressed situation for the last nine-ten sessions. If things remain positive, Nifty could touch 5600 level in middle of next week.

However, the sustainability of this rise or pullback might not be so assured of shorts because negative headwinds still continue to be there in the larger macro parameters.

On HDIL

The realty sector is not every amiable or conducive for trading in these conditions. HDIL has had some negative news coming in more because of the FSI changes in Mumbai. It clearly follows Mumbai centric business. The negative news is very short lived.

HDIL will continue to perform better than some of its peers in Mumbai market. Once the negative news is digested, we could see a little bit of up move. The investor could possibly book losses, but not to a significant extent.

If an investor is willing to move out of real estate, the opportunities are huge. If he/she wants to stick to real estate stocks like Phoenix Mills or Oberoi Realty would suite him/her much better to take the upswing on the real estate, as and when the sales start picking up ground for the projects and products.

On Reliance Communications

RComm has got enough negative news coming through. We really do not know to what extent the damage can still be felt on the stock. The investor might not be way off from his/her acquisition price in terms of a loss as well. It is better to book losses.

Even if he/she is a trader on a stop loss basis, he/she should have done this by now. If the stock is existed today, he can better off move into a Bharti or something. It is better to get out of Reliance Communication distinctly.

On banks

From a mid-term to long term horizon, I would go for the larger PSU banks like SBI and PNB as their valuations are attractive.

If I were to be able to hold on for a slightly longish time frame, then I would go in for the private sector banks like IndusInd Bank or Yes Bank. These banks will be much more agile and fleet footed in terms of passing on the cost to the consumer and borrowers. Their profile is much safer in terms of maintaining the margins.

We are over reacting to the saving bank rate and hike. There is a bit of over reaction on the prices as well. They will bounce back and will have a much steadier growth in a lot of sectors.

On SKS Microfinance

JP Morgans numbers put numbers to a lot of fears that were around the stock. All these fears are not unfounded completely. This industry has very limited information flow available till now.

Being the first of its kind, it has its glory days in exuberance of sorts. People wanted to put a multiple which was phenomenally higher than what they would otherwise do for financial service companies.

Suddenly, the model is getting interpreted as a very dicey one. It will stabilise at a slighter lower level of about 8-15% and then probably a buy signal can emerge subsequently.