Market could see a rally on Clinton victory: Varanium Cap

The current uncertainty in markets owing to global factors such as US presidential elections is an opportunity to buy stocks, according to Varanium Capital Advisors.

While a Donald Trump victory in the US presidential polls may surprise and upset markets, markets could see a rally if Hillary Clinton becomes the US President, said TS Anantakrishnan, CEO of Varanium Capital Advisors.

Back home in India, Anantakrishnan said that Nifty is unlikely to fall 400-500 points from the current levels. He said the advisory is bullish in financials, consumption and building materials stocks.Below is the verbatim transcript of TS Anantakrishnan's interview to Prashant Nair and Ekta Batra on CNBC-TV18.Ekta: How are you approaching the markets ahead of the big US presidential elections. Has there been a reallocation of your portfolio personally which you have undertaken?A: In anticipation of the event you have already seen a correction. We have had a fall from 8,900 down to 8,500 range. The whole call in the market and globally has been the fact that Trump could potentially be a surprise factor. Yesterday\\'s survey accorded him a 30 percent probability. If I have to go by the survey probability it is a given that Clinton could come in. We believe this is an opportunity for one to add. Obviously valuations are a concern and has been a concern for the last few months in any case. But we are seeing good opportunity for one to pick up stocks that we normally would have had to buy at least 7-8 percent higher at this point.Prashant: What is the risk that the Nifty sells off another 400-500 points from here? What odds would you put to it?A: We don't consider that as a base case unless Trump comes in to - it is a surprise result and Trump comes in I don't see that as a base case. The market is going in - if you look at the open interest information the market is going in light, a lot of positions have already been hedged or long positions have been unbound in anticipation of the event. There is only three days left. If you look at the emerging market fund flows and this is more a global phenomena and not just restricted to India. Last two weeks there have been selling across emerging market funds. If you look at the last 20 sessions you have had out of that 12 sessions Foreign Institutional Investors (FIIs) have already sold. So, in my view in anticipation of the event people have already lightened up the position. So, if Clinton comes into power as probability demands then effectively you could see a rally given the fact that market is going light into this event.Prashant: What is the best way to play that? Option, sells and puts? Or is it too early in the series?A: You pick up the stocks that you want to pick up. We are obviously looking at good consumption themes. We have started to look at good names in the building materials. We believe with the results season as it has gone past so far there are some good opportunities and names where we have started some green shoots, some revival in demand that we have started to see. Obviously it is too early days and it is patchy within the sector also but it is stock specific approach that you take. If you look at the banking sector you have IndusInd Bank and RBL Bank reporting stellar number, excellent loan growth numbers. At the same time you have Kotak Mahindra Bank or an HDFC Bank with good non-performing loans (NPL) situation reporting muted loan numbers. So, there is no sectoral theme that we are actually following. We are looking at specific companies within the sector.Ekta: How are you approaching the Tata stocks, any changes in terms of your holding?A: We don't have any exposure in any of the Tata names. But we believe they are great franchises, the likes of Tata Consultancy Services (TCS), Voltas and Tata Motors given the fall that we have seen would be good names to pick up. This whole episode could have been avoided and been handled in a much better situation but given the fact that this has happened sanity would prevail obviously. Cyrus group has 18 percent ownership of the whole Tata Sons Group. So, effectively it is not in his interest to keep dragging out this episode any further. Saner minds will prevail and probably within a couple of weeks there would be some kind of compromise which will be reached. So, my belief is it is an opportunity to pick up good names within the same Tata Group.Prashant: But it is interesting, you don't own any Tata stocks right now?A: Correct.Prashant: Can you get us as closer as you can to these individual stocks that you were talking about that you like?A: So if you look at the sectors, if I have to give you a sector we obviously are bullish in the financial private banking services, private banks and Non-Banking Financial Company (NBFCs) have rallied up quite dramatically. So, we think there is opportunity now in select public sector undertaking (PSU) banks. We think the worst is over as far as the NPL crisis is concerned as far as the PSU banks are concerned and so credit growth will start to pick up. We are looking at the names like State Bank of India (SBI), Bank of Baroda (BoB) in the financial services sector, similarly pharma stock specific approach that you take which we have been there are several names that we are bullish on in that segment.Prashant: Aurobindo Pharma has been one of them?A: Aurobindo has been one of them. Alkem is one which we do like. So, there are a whole host of sectors that you could potentially look up in the same segment. Autos we think the numbers from many of the commercial vehicle (CV) segments Ashok Leyland in particular we have been waiting for numbers to pick up in CVs the kind of last results kind of bode well for them. They are doing huge amount of free cash flow generation. So, those are some of the names that we have in our portfolio also.