Broader market will most probably remain dull as far as the Nifty goes. Taher Badshah of Motilal Oswal AMC does not expect much action from frontline indices in January. Infact he expects the market mood to remain subdued till elections.
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Considering the fact that January will be dominated by results, the first rollout will come next week with Infosys announcing its third quarter numbers, which will bring the entire technology sector back into focus, he says. Badshah is reasonably positive about this sector's ability to grow. He also expects IT and telecom sector companies to post good third quarter numbers.
He believes midcaps will continue to give good returns in the near term. He continues to see individual opportunities in the midcap space. He advises investors to stay away from the realty space.
Below is the verbatim transcript of Taher Badshah's interview on CNBC-TV18
Q: How do you expect the January series to pan out and in terms of specific allocation, what would your top sectoral calls be now?
A: From a broad market perspective we will probably see a very dull kind of market as far as the Nifty goes. So if you were to measure from the point of view of the frontline indices I doubt we will see a lot of action.
Clearly because of the fact that the month is essentially going to be dominated by the result season and that is something which is going to drive more of individual company and sector expectations and probably the action also will therefore be concentrated on those lines. Also given the fact that we have got a little bit of the overhang on the political front in the run-up to the general elections and the overall market mood will continue to remain subdued till the time we have further clarity in terms of which way the overall political outcome is likely to swing.
So I wouldn’t have much of an expectation out of the January series from an index perspective but we will see the first rollout of results come in with Infosys in the next week and that is probably going to put the whole technology sector back into focus. We are reasonably positive about this sector’s ability to grow not just in this quarter. Of course the quarter expectation for the technology sector is likely to be a little muted compared to the previous quarter but that is more because of seasonal effects and typically December quarter does appear to be slightly dull for technology. But despite that I think it will be one of the better quarters for tech in general.
We would probably also expect a decent amount of activity from even the industrials especially some of the large infrastructure related names. We will see quite a lot of growth in companies like Larsen and Toubro (L&T) and some of the larger frontline names in this sector primarily because of a little bit of the base effect as well as higher execution which comes about typically in the second half of any fiscal year. So that is another sector. I think we will see good numbers out of even the telecom space especially at the operating level driven by a decent volume growth coming back after a slightly dull volume growth in the previous quarter and also stable rates.
Q: Want to ask you about the Power Grids of north India now connected to south India, one is Unified Power Grid, would any specific stocks be on your radar because of these power stocks or any southern stocks which are starved for power?
A: I think it is a good development from the point of view of just balancing out the whole power supply-demand situation. I think some of these stocks which are geared to providing power transmission equipment etc especially are going to be benefited out of this space. There might be some losers as well because there will be some companies which will probably be benefitting out of high power rates in certain territories, those will probably see a negative impact. Also some of the companies which are actually been bearing the brunt of high power rates in the south for the last few quarters - be it pharma, be it some of the other manufacturing firms as well are also going to be positively benefiting out of this development.
Q: What about the midcap space, what are your top stock ideas in the midcap space now?
A: Midcap is a basket which clearly looks pretty exciting still, we see decent value in various companies. Of course again I am a little constrained in terms of calling out names but I will only say that in sectors like IT, pharmaceuticals we probably will see a decent midcap opportunity. We also see opportunities in some of the infrastructure names like those which are in the port logistics space. Some of those companies which are actually geared towards manufacturing exports, we like some of the midcap companies which are still reasonably strong, seem to have a reasonably strong growth coming about even in the retail space. So these are some of the sectors or some of the areas in which midsized opportunities will come about.
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