Destimoney Securities suggests value buying, picks stocks

The Indian market has been volatile over the last few sessions. This week, the Nifty and the Sensex gained 0.7 percent each.

Moneycontrol.com got Sudip Bandyopadhyay, managing director and chief executive officer, Destimoney Securities to answer the stock queries you sent us on our Facebook page as part of KYI (Know Your Investment). Check out his comments.

Also read: Mother-of-bull markets is ahead of us, says Jhunjhunwala

D.n. Verma: Should one go for equity or gold?

A: At this stage, one should go for a judicious mix of gold and equity.  However, the bias should be towards equity. While gold has appreciated significantly over the last 12-18 months, there exists scope for further gradual appreciation in gold price over medium to long-term.  Thus, parking anywhere between 10 to 20% of surplus in gold may be advised.

On the other hand, inspite of recent run-up in the equity, there exists significant opportunity of value buying even at current levels.  With growth momentum slowly coming back in the economy, it is expected that equity market will also gain traction over the next 6-12 months.  Ofcourse, one needs to be careful in selecting stocks and identifying sectors.

Harsha Jethmalani: Should any correction in Reliance Industries (RIL) be seen as an opportunity to buy?

A: Reliance Industries is a good buy for long-term.  The company is in right businesses with lots of liquidity.  Though at present few of their businesses are under pressure, in the medium to long-term, RIL will surely outperform the market. However, it should be also understood that in the short-term RIL will continue to remain volatile.

Ravi Cheke: What is your call on Canara Bank, State Bank of India and Axis Bank?

A:  One needs to be cautious while selecting stocks in the banking sector.  The stress in the economy is getting reflected in the asset quality of banks. PSU banks are definitely more affected compared to their private sector peers.

At current valuation, Canara Bank, State Bank of India and even Axis Bank look attractive for long-term.  However, the overall non-performing asset (NPA) situation, the changing provisioning norms and the economic uncertainties, prevents us from recommending investment in this space at this point of time.

Joel Peter Lobo: What about L&T Finance, JSW Steel and NTPC?

A: With long-term perspective, exposure can be taken in L&T Finance and NTPC .  Infact, NTPC is a good buy at current level with medium to long-term perspective.  NTPC is the largest and most efficient power producer with better backend and frontend tie-ups (i.e. coal linkages and SEB buyback arrangements).

Globally, the steel industry is going through a huge turmoil with significant reduction in demand from China and various other developed markets.  Global steel companies are underperforming the benchmark indices.  In case of JSW Steel, there are further company specific regulatory and operational adversities.  Thus, it is advisable to avoid taking exposure in JSW Steel at this stage.

Alpesh Patel: I have 500 shares of Reliance Capital at Rs 410. What should I do now?

A: While the valuation looks attractive, considering price correction that has taken place in this counter over the last couple of years, the overall economic and business environment does not support any rationale for buying.  The company’s wish to obtain banking license may not bear immediate fruit, and that may act as a dampener to the sentiment in the counter, in the near future.

Manish Mittal: Is Electrosteel a good option for long-term investment?

A: With long-term perspective, exposure can be taken in Electrosteel.  However, it should be noted that current turmoil in the global steel industry affects even special steel manufacturers.  Thus, in the short-term, no miracle should be expected from this scrip.

Prashant Jain Barar: I have Reliance Power at Rs  202.  What I shoud do?

A: At an opportune moment, you can switch from Reliance Power to NTPC.  This will enable you to reduce execution risk from your power portfolio.

Chandan Salaskar: What is the future of Union Bank of India?

A: The future of Union Bank is good.  However, the current economic environment, existing asset quality pressure, provisioning norms and near-term economic outlook does not support investment rationale in PSU banking space at present.

Prabhat Manohar Tamhankar: Is Marico a 'buy' now?

A: Investment can be made in Marico with medium to long-term perspective. In the short-term, the counter may be volatile as few key raw material prices may fluctuate in the near future.

Sunil Pareek: What about UCO Bank?

A: The future of UCO Bank is good.  However, the current economic environment, existing asset quality pressure, provisioning norms and near-term economic outlook does not support investment rationale in PSU banking space at present.

Mukul Mansinghka: Which real estate stock would you suggest now?

A: Out of real estate stocks, investment in Godrej Properties and Oberoi Realty is recommended with medium-long tem perspective.  Aggressive investors can also explore investments in Orbit Corporation.

Apart from everything, the quality of management, corporate governance, business practices etc. should be critically examined prior to taking exposure in real estate counters.

Abhinandan Jain: What is your view on Housing Development and Infrastructure (HDIL) now?

A: Investment in HDIL is not recommended considering the current economic environment and company specific issues.  Short-term price appreciation may happen due to multiple factors.  However, medium-long term view in this counter is uncertain and will be contingent upon multiple factors both macro and micro.