Here are some trading bets from Mehraboon Irani

In an interview to Latha Venkatesh and Anuj Singhal on CNBC-TV18, Mehraboon Irani of Nirmal Bang Securities spoke about the current market trends and specific stocks and sectors.Below is the verbatim transcript of Mehraboon Irani’s interview to Latha Venkatesh and Anuj Singhal on CNBC-TV18.Anuj: Your stocks are doing well, I think the two names that come up for me are Tata Motors, one of your most preferred bets, do you still back it and Delta Corp which is coming out after not doing anything for years?A: I think Delta Corp is a story which we believe will continue for quite some time to come. I think recently at an interview on one of the news channels, some leading expert on the gaming industry said that India could be the next big market after Macau as far as casino goes. I believe that if the Daman licence comes through, the stock has a lot of room on the upside. The fact is when you notice a stock which has not done anything for many years suddenly gives you 100 percent returns and you start believing that it has gone up too sharply, the answer is yes it has gone up too sharply. However, the answer also is that there is a lot of room for upside. So, people who are holding this stock and that is what we have been doing, we have been asking investors to stick to this stock because according to us the story is big and the story ultimately will play itself out in India also over the next many years. As far as Tata Motors, it remains the most preferred bet. China joint venture (JV) continues to surprise. The demand remains intact for the models; the new models are doing well. I think the currency overhang which people were having, I think that has played itself out. So, I believe next two to three quarters also should be good. If you recall, I had mentioned, that if we have decent earnings coming for the next one to three quarters, I think people will infer and I will always believe in that Tata Motors will see a new all time high very soon. Latha: I guess you are going to keep your money in the stocks, you will let the stocks run? A: I suppose so. Tata Motors somewhere maybe near its all time high, price of Rs 600 odd I think possibly somewhere I will take some profits home because I have always believed Tata Motors is a global company and you need to compare it with Daimler-Benz of the world. I think at 60 euro Daimler-Benz looks very cheap to me, so, somewhere if Tata Motors goes to that level, I think there will be a level at which somewhere one would need to go and take some profits home. However, as of now, I think a clear 15-20 percent upside more from here over the next one to two quarters will definitely not surprise me. Anuj: Temptation to buy Infosys from portfolio point of view or will you avoid it for now?A: Honestly avoid it. I personally believe and I have been stating this that I don’t see the trend of the market getting broken in a hurry; we could correct here and there but the trend remains positive because there is a lot of skepticism still in the market, people are still questioning earnings. We have to remember that India has been in an earnings down cycle for the last three years and I believe that post September, the cycle could turn and that will be the single largest cocktail or recipe for the bull market to continue. This is not to state that valuations as of now are not expensive but coming back to your question on IT, I personally believe Infosys in particular, IT and pharmaceuticals have been two consensus buys. We have been negative, underweight on these two sectors for quite some time and I personally believe this sector along with pharmaceutical stocks could possibly make people feel we didn’t participate in the bull run because if we look at these two sectors and the stocks in these sectors be it Lupin, Sun Pharmaceutical, Cipla, Infosys, Wipro, or Tata Consultancy Services (TCS), they have not given much of money to investors over the last two to four quarters and I believe this will continue. So your question Infosys will I buy, answer is no. This is not to state that I see the stock fallen too much, this is to state that I don’t see the stock doing too much on the upside. It is nice to say Infosys 16 PE FY18, I should go and buy into it but you don’t buy a stock just because it becomes cheap. You buy a stock because you feel it will become relatively expensive to the market over the next one to three quarters and I don’t see that happening for Infosys or for the frontline IT stocks happening in a hurry. Latha: Even in the midcaps no picks in IT? A: Honestly no. Here and there Persistent Systems, Mindtree somewhere may give you trading opportunities, even the frontline IT stocks may give you a trading opportunities possibly on the bank angle but buying it in the portfolio right now, I honestly don’t think I would be in a hurry to recommend anything in that particular space. Anuj: Just a couple of sectors, a) what will you do with cement especially names like UltraTech Cement, of course you have had your favourites in the midcap cement space and b) PSU banks? A: I think cement, certainly a big thumbs up. I have been very consistently positive on this for the last nearly four to six quarters. I have been stating that if you believe in the India story, you can’t ignore cement. They were at very attractive valuations and we still continue to like them. Quite a few people are arguing that they have gone up too sharply but that is not the way we look at it. We believe that the story ahead continues to remain positive. Our top pick remains Dalmia Bharat, followed by OCL, both more or less belonging to the same stable for the simple reason that operational leverage continues to be in favour of Dalmia Bharat. The name which you mentioned, UltraTech remains our top pick among the frontline cement companies.Regarding the PSU banking, public sector banks, again over here consistently positive from the trading angle. I have been stating that 2016 and 2017 could give you many great opportunities to trade long on the public sector banks space and earn maybe 15-30 percent returns in a very short period of time. Two to three times it has already given an opportunity. At the present level what to do? I think remain invested but very selectively as of now because the market believes in one simple thing and that is the direction. If you believe the direction as far as the balance sheet of a PSU bank goes, is going to turn better and better with every passing quarter, the answer is you have to go and buy into them and not sell into them like what many people were believing. So, Bank of Baroda (BoB) was our top pick and it continues to be our top pick even now among the PSU banking space.