Construction and select cement stocks seem good bets: Quantum Securities

Sanjay Dutt, director at Quantum Securities, said there are clear indications that 2020 would be a better year for equities, which is evident from the fact that despite the Iran crisis blowing out, the Nifty did not go below 11,800-11,900  and the midcaps continued to show strength. In fact, the day before yesterday, midcaps outperformed everything else, he added.

According to him, the cyclicals are going to be the best bets. "Investors must note that all those people who survived this carnage – relating to governance issues, debt, insolvency - over the last two-three years in the corporate sector, are going to make a lot of money in the next five-ten years.

"So, it would be prudent to pick up good names, good managements and just have patience and not worry about these geopolitical tensions. It is not going to change the fundamentals of the market. You could see price damage but one will have to live with the volatility," he said in an interview with CNBC-TV18.

When asked what was the biggest risk in 2020, he said: "Ultimately it has all got to do with growth. If we do not have growth pick up, if we do not have things starting to look good over the next two-three quarters, we are going to be in bigger problems. That is the only risk that we are dealing with."

However,  it is comforting to know that contrary to what the position was last year in July-August, government is on the levers at this point in time and it is very clear about what it needs to do and everything is focused on growth, said Dutt, adding that basically, the government is ensuring that there is adequate liquidity in the system, is focusing on infrastructure projects and is trying to go to industry to do things.

"A very clear pointer has been that in the last few weeks, the credit market is  looking better, companies are able to raise money and things are definitely stabilising. So, the risk definitely remains but it is being mitigated slowly. The last quarter of this calendar year is going to be pretty positive for the markets," he said.

Giving his sector preferences, he said it would be a  mix of cyclicals. "Steel is something I like. Construction, select cement stocks are looking pretty good. So it is a wide basket amongst the BSE-500 to pick up and ride out for the next two-three years," said Dutt.

Source: CNBC-TV18