Buy Marico, LIC HF, Prestige Estates: NBIE

Pashupati Advani, analyst, NBIE, says that he feels that in the FMCG space Marico is a good bet and LIC HF has a good potential to give decent return. In the Bangalore-based real estate space he is bullish on Prestige Estates.

Below is the edited transcript of the interview. Q: Will Gujarat election result have any impact on the market today?
A: I think so. If Narendra Modi wind decisively, then the market will be happy, as there will be stability. If he gets less than 120 seats then many doubts will be created. It is an important event for the market.  Q: How are you feeling about the market itself? Is the best behind us or do you think there is still potential for a late dash by the time we hit the end of the year?
A: I think the US fiscal cliff issue will affect us. I feel that they will push it through right at the end and as a result of which the optimism will continue and they will be printing money all over the place, like Japan started yesterday. We might even have a bit of December effect which is unusual. Q: Now where is the downside protected on the index?
A: I think the index will not go down too much. I am concerned about the rupee and the dollar. The rupee is approximately at 54.5-55. It does not take much of a trigger for the rupee to go the other way to 58-59 and then foreign investors will not be able to make money in dollars. They will be disappointed. I believe the inflow of USD 3 billion net which came in is very encouraging and this shows that people are interested in investing in India. Q: How would you approach the banking space, especially some NBFCs and the smaller banks?
A: The talks of banking license will always give them a fillip, but in this market if you are bullish then one should buy high-beta stocks like banking stocks, NBFC stocks, real estate and infrastructure. Q: What do you hear about the money that you were referring to? To be pulling Rs 1,000 crore plus everyday is quite overwhelming for this market. Is it likely to remain strong going into next month?
A: I believe that flows always drive the market, so we had this jump in December. I assumed that this is so called smart money in December which tries to predict what is going to happen in January. I definitely looks like that more money will be printed as a result of which all assets will be raised nominally so there is no reason why our market is not going to stay the way it is.
We have doubts because of the currency and huge short term deficit. In a kind this has put a cap for us to not perform and the movement of the US market. However, the US market has moved back to its high, and we are not yet there. We are far away in dollars. So, we are still not flavour of the year. Q: Which are your top bets for 2013?
A: If the proxy is that the money is coming in, then it will come in stocks which look undervalued. So we need to enter into high beta stocks. In the banking space there has been some change in rules on voting, so even the private banks though they are high will move higher. One needs to take a on metals and ore because prices in China looks to be moving up. One need to make the high beta play if one wants to make money in January and if there is stability on reforms front then a higher run would look fine. Q: Would you start to trim positions in either FMCG or pharmaceuticals then?
A: No. this is not the correct time to trim because the money is still flowing in and it will flow across the index. ITC and HUL came down a bit as they had a good run up and I think they will have some type of stability, but again I think in January they will move because the new money will come in and it will go in the index. Q: What would you pick from the midcap space now?
A: Though LIC Housing Finance is not a madcap stock, but it will perform. In FMGC space, Mario looks an interesting to be bought at these levels. Q: Are you looking at any aviation or shipping space which has now started to move recently?
A: In shipping I think the overseas operations have not yet picked up and that is causing some cloud in the market. I think aviation is a very tough business as there is lot of political risk and already many stock had a good run up on rumors of Etihad transaction which no one know when will happen. Q: What is your view on Bangalore-based real estate entities? There has been some outperformers like Brigade, Nitesh Estates and others?
A: The Bangalore real estate responds whenever the technology market moves and since we have had a good run in all the technology stocks starting with Infosys that tends to get people to come out and buy real estate. In this space, I think Prestige Estates is a good pick.  I think whether you buy one of them or all of them it is probably a good basket to be in. Q: Would it just be sentiment today if the markets move up on a Modi victory or do you think there are indeed material ramifications?
A: I think people are expecting Modi to win, but it depends on the numbers. If it is less then the market is in for a bit of a cooler. If he gets a thumping majority then we may get a big jump. I don't think today there will not be much movement; if the poll numbers come in strong then we might see an afternoon rally. Q: How do you see response being for some of these government candidates now which are lined up next - NTPC, Oil India and RCF?
A: I think that there are people who still believe to buy government stocks and there are some Indian institutions also are gently selling to make room for them. At the end of it all, if they are able to buy a stock at a discount to the market or maybe at the market in large blocks then it will be a great advantage. The government is offering all attractive stocks. So, I think these offer for sales will go through. I think retail participation would be good for the market.