Tata Steel, Hindalco look good for long term: PN Vijay

Tata Steel and Hindalco are looking good for long term, says PN Vijay, askpnvijay.com.

Vijay told CNBC-TV18, “There are two ways of looking at metals. They are the most complex space today if you ask me. Last time the Sensex was at 1900 Tata Steel (TISCO) has crossed has crossed Rs 600, so TISCO just crossed Rs 400 in a day or so. There is hell of a lot of catching up to do by the metals. But that does not necessarily mean that the catching up will be done.”
He further added, “Retail investors make the mistake of assuming that every share will catch up but there could be shares in the infrastructure which will never catch up for the next five years. But metals have some good names, some blue chip names so there would be some amount of rotational buying. But, the deeper trend I feel is again the risk on. There could be perception that metals, the demand for metals especially from China would improve going ahead with the new regimes, liquidity improvement, the growth oriented policies, so that maybe the broader story especially for the non-ferrous space. I think that people who are buying Hindalco at Rs 185 or TISCO at Rs 410 are not looking for those immediate gains. One of the leading brokerages had a strong buy on TISCO on a slightly contrarian way are looking at the major gains that would come down towards the later half of 2013 when solid global economic recovery gets underway.”
"I think the divestment is not a big – it could be a short-term flow on the market but longer term it is really that Hindustan Zinc is one of the most high quality names in the non ferrous space. The way they have the lowest cost of production and they have silver, etc also alongside that so any person who wants to take a medium-term view of the metal space and who wants to go away from the index stocks like Tata Steel or Steel Authority of India (SAIL) would naturally focus on Hindustan Zinc and that is where that matters for retail investors. It did fall quite a lot but it has given traditionally if you see over the last 10 years huge returns for the investor’s right through the disinvestment process, etc over last 10 years. So, Hindustan Zinc continues to be a midcap favourite of many people and I am not surprised that when there is rally in metals it will be one of the fastest of the block."