Midcap stocks are likely to see more action than large caps stocks going ahead, believes Taher Badshah, Sr. VP & Fund Manager Motilal Oswal Asset Management Company. Midcap stocks witnessed a stellar performance against blue-chips last year, but this year the segment failed to maintain its sheen primarily due to low participation from investors. (Read More)
Cherry picking stocks from this space, Badshah recommended betting on Bata India, Page Industries, Cummins India and Voltas. From the midcap IT space, Tech Mahindra is the fund house's top pick and has exposure in the stock. He further added that recent top level exits will not impact IT giant Infosys’ upward move and the underlying growth momentum for the company is likely to continue. Continuing his bullish tone, he said oil and gas stocks are in for a huge upside.
On the flipside, he is not too positive on the Indian banking sector due to sluggish growth and asset quality concerns. Also, no clear roadmap remains a challenge for the power sector, he said.
Below is the edited transcript of Taher Badshah’s interview with CNBC-TV18
Q: Would you say that this last week will be a relatively quite one, no fireworks?
A: Most likely. May be not just the next week, but perhaps couple of weeks in the run-up to result season. The next action will be the result season. It will be again driven by individual companies and sector specific outcomes of the result season because we probably don't have any major news flow to go by in the weeks prior to that.
Q: A word on how the rollovers might happen today? It appears that some sectors like power, real estate have not seen the usual kind of rollovers. What would be the pockets you would watch out for today?
A: Hard to pinpoint on one specific day basis, but from an expiry point of view, it doesn’t look like we will see any major fireworks either ways. From a Nifty perspective or a large index perspective looks like it being a slow grind for the market. We will continue to see action in the broader market and more on the midcap space as has been the case in the recent time. No real outcomes out of some of the expiry linked movements but clearly some of the stocks which have moved prior to the expiry in the last couple of weeks are likely to just under around for a while.
Q: This month has seen fair amount of good news for the markets, a fairly reasonable BJP victory which for whatever reason the market thought is positive for itself, change of an environment minister, a rate hike that did not happen and a taper that did not terrorize any markets. Inspite of it 6350 has held as a huge resistance level. What is the take home from this?
A: From the point of view of global and macro news, it has been positive, but one large sector from a Nifty perspective is still sluggish. It is not really showing any major improvement in the banking sector which is a very large component. I maintain that going forward for the Nifty to see some kind of breakout or move into new territory, the banking sector has to clearly deliver. Till that happens, we will be still a little hostage to what happens to the coming inflation data over the next few weeks.
We are looking forward to a better number, better print in the next inflation data but it has to sustain itself and we need to see consistent downward momentum for the market to start believing that we will not just be in a pause mode, but in a decline mode as well. Meanwhile stressed asset levels are not really showing any major signs of tapering off and that is keeping the overall sector in check. We will have to see a lot of delivery out of the banking sector to probably be able to see new highs on the Nifty.
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