Here are some stock trading ideas from Taher Badshah

However, this time around, there will be greater amount of expectations out of the second half particularly out of companies, which are in the cyclical variety may be even the public sector banks those will be the areas of action even commodities for that matter. They are also the ones on which probably the margin will drive the growth expectations for the quarter as a whole. I think that is what we are in for at this stage. However, yes you are right that we have not had a great beginning.

Sonia: We saw that in the Hindustan Unilever (HUL) numbers, just a 4 percent volume growth and the management indicating that rural growth has slowed down quite a bit, what do you do with the fast moving consumer goods (FMCG) pack and especially over the stock like HUL?

A: The volume growth this quarter is probably not being very different from what it was in the last quarter. Although it is substantially decelerated from what it was may be a year ago. However, the good part, probably the good news here is that may be the deflation, which we have probably being seen in the topline and the result of commodity prices falling and therefore even product prices not going anywhere that has probably bottomed out.

Here in the FMCG space as a whole and Lever included the focus will be more on what is in store in future particularly that the market’s expectations on monsoon are turning out to be reasonably good. We are looking forward to a recovery in rural demand as well as government spending.

Last but not the least, like I mentioned that a disinflation of commodities is almost done with and we could see higher topline growth may be even some element of premiumisation can probably kick in. For many of these companies that is what will determine the future of the stock and that will probably keep the market excited.

Latha: Is there anything in the finance space that you will buy? Some of those companies have not done too badly?

A: Are you referring to the non banking finance companies (NBFCs)?

Latha: NBFCs, yes?

A: Those have clearly done well and the good part is that the visibility of the growth in earnings out there has been pretty strong over past few quarters especially in segments like housing finance, consumer finance, rural oriented finance, some microfinance and so on. So, those are segments which are clearly on a tear as far as growth goes and to that extent the excitement continues out there.

However, we have seen a fair degree of move in many of these names in the more recent past. They have had a significant outperformance for the market as well and valuations are not necessarily very easy to deal with at this stage. So, I think they will probably pause even if they don’t significantly correct. They will remain an area, which will continue to draw attention of investors given the growth and the runway to the growth as well that we have for the future. I think for the short-term, we have had a fairly significant move in many of these names.

Sonia: The other good set of numbers after a long time came in from Exide. Finally the growth has picked up to double digits. It is not indicative of what is happening in the sector as a whole because Exide has been beset with its own problems but do you think the worst is over for that company and would you put money here?

A: The good part is that this segment of the ancillary market is very consolidated and we are dealing with about two or three players at best. There is descent amount of room for growth as well. However, just focusing on this quarter results in particular probably in case of Exide have been driven by the non auto segment more than the auto segment.

There is still less evidence to suggest that they started to regain back their share in the automotive segment to the other players in the markets. So, that will probably remain something which the market will watch out for in the near future. However, it has been a good comeback over the last two quarters for the company.

Sonia: We have UltraTech Cement’s numbers today how are you positioned in this sector now?

A: We don’t have any exposure right now in largecap cement companies. We essentially got a little bit of exposure as far as the mid-sized cement companies go. We are largely focused on companies where there is decent amount of volume growth coming in the next say six to eight quarters. While prices have been reasonably firm we don’t want to only be reliant on price growth and even profitability. So, that is making a decent kind of sense to us as far as this sector goes given that valuations are reasonably on the richer side.