Here are top trading ideas by Sanjiv Bhasin

In an interview to CNBC-TV18 Sanjiv Bhasin, Executive VP-Markets & Corporate Affairs at IIFL shared his reading and outlook on the market.

Below is the verbatim transcript of the interview to Sonia Shenoy and Anuj Singhal. 

Anuj: The top of the mind topic today is Reliance Industries (RIL). There is a big fine by Sebi, of course not by Reliance’s standards, but Rs 400 crore plus penalty. What do you think it means especially in terms of any corporate governance premium and also the fact that the stock has done so well over the last one month. Do you see a risk to that rally because of this issue?

A: It tells us that justice can be delayed but not denied. Just on a lighter note, what was there 10 years back is now come to rule and I think it is a prudent judgment. I won’t go into the pros and cons, but I think it will be a matter of time as we get over that. It is a little bit of a setback that a premium company like RIL will not be on the derivative side.

However, I would say any weakness as of today for this event, would be an opportunity to buy for the long-term investors because for once after almost seven to eight years RIL is now the bellwether which is leading the Nifty higher. If we have to get to levels of 10,000 by June, then RIL should be closer to Rs 1,450-1,500. We think that any weakness for this event will be hardly -- it will be all bought into and we will take it from there.

Sonia: The other issues that people have been discussing all of last week is when Finance Minister Arun Jaitley spoke to us at the IBLA Awards telling us that there could be some new methods to resolve the NPA issues in banks. Would you be hopeful and would you buy into any of these PSU banks or even increase your allocation further in private sector banks on account of this?

A: That is a glass half full or half empty. We have heard about a lot of these events and how a bad bank or such a thing can come into play. I think right now the government machinery, the balance sheet is strong enough if they went ahead with these measures. It would send a real positive signal for global as well as domestic investors and the banking system would feel more secure. However, on any other reason, we are rightly of the view that the bond yields may have peaked and we don’t see the bond yields falling from here.

So, we think that the best of treasury profit may have played out for PSU banks. If you have to take a view, you have to take a view on the back that credit will expand in the second half and that should be a game changer because we know their modus operandi of coming into the retail side rather than too much of dependence on corporate loans -- that could be the key. So, we are relatively sanguine on few names, just to name State Bank of India (SBI), Bank of Baroda (BoB), and Union Bank continue to be three top picks which we have in the PSU side.

Sonia: Mahindra and Mahindra (M&M) had an analyst meet yesterday where they spoke about two new SUVs that they will launch over the next two years, they spoke about new acquisitions as well in the farm equipment space. How are you positioned in this stock and compared to the other auto majors, do you see any edge that M&M has in terms of value?

A: For us M&M has been a market performer to slight underperformer. We think the tractor sales and given on how the monsoon will play out, will be a positive. We think the remonetisation with a very good crop could be a slight bit of a positive. However, we are very doubtful on the SUV market given the extent of the Ola and Uber on the landscape. We continue to think if you want to play the four wheeler side then it has to be Maruti Suzuki and Ashok Leyland is our dark horse over there.

M&M like we said, the tractor sales could be impressive, but in that case you would rather play Escorts which has been an outperformer and which continues to see double digit growth in the next one year. So, for us M&M is a market performer. We would wait for more commentary, more numbers and then we will take it from there.

For full interview, watch accompanying video.

Disclosure: Reliance Industries, which owns Reliance Jio, also owns Network18, which publishes Moneycontrol.