Antique's 5 bets in rising market environment

With asset classes like gold and crude having been whacked over the last 10 days, Dhirendra Tiwari, Head of Research Antique Institutional Equities believes it could lead to re-rating for the equities as a whole.

He says, if the crude prices fall by 8-10 percent,  then there could be a dramatic fall in under recoveries making the whole oil sector look appealing. "One could look at a 14-15 percent upside in ONGC and BPCL from the oil space,” he says Also read: Videocon, BPCL soar on new gas discovery area in Mozambique Banks like Yes Bank and IndusInd Bank would continue to do well, especially in an easing rate environment, Tiwari says Commenting on their pick SpiceJet, he says with consolidation in airline industry and fuel bill going down, the stock could see a meaningful upside. Below is the verbatim transcript of his interview on CNBC-TV18 Q: There has been a lot of interest around crude primarily because of the correction. How are you guys approaching that whole basket and what’s the top buy from some of these oil related stories for you? A: Both crude and gold falling is an overall very positive development. We feel that these two-three developments will lead to significant re-rating for equities as a whole. Specifically for oil sector, under recoveries will fall dramatically if crude falls by say 8-10 percent. In that context, the whole sector looks appealing but we prefer ONGC, we prefer BPCL in this particular space. So, overall market should see some positive bias in next six-seven months because of these things particularly. Q: What kind of targets have you all set for ONGC and BPCL? How much more upside do you see to stock prices from here? A: You could look at around 14-15 percent upside in each of these cases. Having said that these stocks can have meaningful upgrades in the months to come. For example, looking at the overall prices, if they go down to USD 90 per barrel then the situation will improve further. These are dynamic situations and we will keep on monitoring them but one can look at that kind of upside in these two counters in the months to come. Q: Banks have been extremely active and Yes Bank is one of your top picks. Why do you like that stock and what kind of price target and earnings target do you have on Yes Bank? A: To give a brief background, if one looks at the developments like crude and gold falling which can lead to significant amount of reduction in current account deficit, and the increased possibility of rate cuts going forward given that inflation is moderating. Some of the private sector banks like IndusInd Bank and Yes Bank have performed very well in recent quarters and in an easing rate environment they will continue to do so. So I would assume that we are looking at anywhere between 18-20 percent kind of growth rate in these companies. At least, you could look at earnings upside or targets of anywhere between 15-20 percent. I would not give exact numbers but between 15-20 percent would be fair assumption to look at in case of Yes Bank. IndusInd Bank is also one of the preferred banks in that category. These two banks, we continue to like in the private sector space. Q: You have picked SpiceJet. Do you expect this quarter to see some kind of jump especially on the bottomline and do you have a target for SpiceJet? A: The basic consumption of fuel is something which one can look at in case of falling oil prices and the consumer industries would benefit. So SpiceJet can be a beneficiary of that and that’s the reason we like that stock. It has been quite a choppy trade in past one year but we believe that with consolidation in the airline industry and possible upside to earning because of the fuel bill going down can add as a key catalyst for SpiceJet. Upside can be meaningful on that counter.