In an interview to CNBC-TV18, Deven Choksey of KRChoksey Investment Managers shared his readings and outlook on specific stocks and sectors. Below is the verbatim transcript of Deven Choksey’s interview to Latha Venkatesh & Anuj Singhal.
Latha: Let me start with the rupee itself. Are you getting a little more constructive on IT stocks?
A: On one side, you may want to look at the companies which are going to be benefitting out of the fall in the rupee value. On the other side, we are likely to see the impact coming on to the market. Our market is likely to face a larger amount of heat because of fall in the rupee value. It has already gone beyond 68/USD. Should it fall beyond that level and go up to 69/USD or a little above, which it touched in August, 2013 then in such situations we might see some more pressures in the market largely coming out from the global exchange traded funds (ETFs) who are relentless in selling into Indian markets.
So yes, certainly in some of the sectors, the impact should be seen positive because of the fall in the currency value, maybe 25 to 50 basis points kind of a margin improvement could also be seen in the IT sector. While the fact remains that that may not come true as far as the market is concerned because of the reason of ETFs, which I explained, which would probably sellers in coming days.
Anuj: What are your thoughts on Petronet LNG and the fact that that stock is rallying 7 percent in a weak market?
A: Largely to do with the procurement and the volumes. The cost of procurement coming down and volume on the rise, these are the two factors which are working positive. So, certainly, we see the 2017-2018 as a financial year likely to be driven by larger amount of volume growth for the company and that is where the market is probably recognising. Also the fact that some of the global investors have started adding this particular stock into the portfolio in this fall, in the market nervousness, whatever you call it, that is where you are seeing some amount of strengthening of the counter in this market.
Latha: Overall, what are you telling your clients? Is this dip enough for you to buy, to start building your portfolio 10 percent or whatever?
A: Company to company, the view is being given to clients. Those companies which are facing the consumers, we do believe that the postponement of the demand which is taking place right now, it could result into a larger amount of growth in the sales in subsequent period of time. So we are telling the client that if there is a fall in the sales volume in this particular month due to these reasons for some of the consumer companies, this is going to be rising subsequently once the normalcy situation establishes and currency comes in hands of people and people start spending back. It could possibly bounce back with a very sharp bounce completely in January-March quarter, if the normalcy returns. So, in such situations, you may probably get an opportunity into those companies which are available at significantly discounted valuations in the market today. So, we are selective in our approach in picking up some of these companies.
Latha: If you could name them please?
A: One of them could be a company like Asian Paints. Once again, they have the situation on the ground where they have the cash business happening at the dealer level and not at the company level of course, but at the dealer level, if there is some amount of cash happening, maybe about 40-50 percent - that has impacted the sales today, but this is a demand which is going to come back again to them, once the situation turns back to normal. And that is where we believe that correction in the price could be an opportunity into companies like Asian Paints or for that matter other paint companies.
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