Here are top trading ideas from Prakash Diwan

In an interview to CNBC-TV18, Prakash Diwan, Market Expert at Altamount Capital Management shared his readings and outlook on market and specific stocks.Below is the verbatim transcript of Prakash Diwan’s interview to Latha Venkatesh, Anuj Singhal and Sonia Shenoy on CNBC-TV18.Sonia: Wanted to discuss some stocks with you. Some good numbers coming in yesterday post market hours – Mahanagar Gas, Triveni Engineering, Timken India, anything that you like? A: All of them are definitely worthy of being in the portfolio but Mahanagar Gas is something that has always been a favourite and I have said that a long term investment going there as well. What I like is, they have not had a great topline change but they have done very good on the bottomline which shows that the efficiencies that we always thought that this company had, or it talked about -- this does not have a very huge track record yet so you still have to kind of gauge it in good and bad times both, my sense is in these days when there is no topline growth, no new connection that has come into play, it is still has a very strong healthy bottomline. Imagine what happens when they expand to some of these new districts that they are looking at. So, this is a company which without much of capex, without much of incremental expenditure will start getting leverage to be so favourable, you have to have this in the portfolio. I just wish it came down a bit, never does, yesterday also it was closer to Rs 800 then to Rs 750. Whenever it does give you that opportunity, I think people should add into the portfolio. Latha: More blank cheque kind of question, we have seen several stocks lose between 20 and 40 percent in the past three to four weeks since demonetisation; anything that you pick up over there which was perhaps unjustifiably beaten up? A: Whether it was justified or not there is yet -- but my sense is a little bit of overreaction definitely seems to have come into some of the pockets. Cement for instance, I believe and yesterday’s announcement of the Pradhan Mantri Garib Kalyan Yojana very clearly is going to again get into housing as a focus area. Of course sanitation and irrigation are also kind of added on to keep that Garib Kisan Gramin theme of the prime minister or this governments’ focus. However, my understanding is affordable housing is a big multiplier in terms of cement usage, in terms of raw material consumption. In fact the cost of land is what brings it to an affordable level. The construction cost remains the same and cement will definitely have that kind of a place under the sun. So, look at an India Cement, look at an Ultratech Cement, they have come down on valuations, withered down on valuations just because of demonetisation and the derivative impact of real estate sales coming down. So, that is one pocket. The second is auto. Look at a Maruti Suzuki; I checked with a couple of dealership, they started booking at Rs 11 of token booking amount which is fantastic. You anyways don’t deliver right now so there is no downside but you make sure that people commit to it. So, these things will happen and the NBFCs, they have already corrected, there is course correction that has already happening.  Latha: Which ones, DHFL and all have corrected a lot?A: I would look at some of them which are focused on to the rural market more so like the M&M Financial Services of the world, maybe a Bharat Financial Inclusion. I will tell why. Way back, Manmohan Singh had also done this whole thing of refinancing the smaller NBFCs and getting the multiplier effect of money getting into the hands of the deserving; that is exactly what is required now to get over this grinding halt. That lubrication of the economy and that so called informal sector in the legitimate way can happen. So, you can’t rely only on banks to do that. So, you will have to look at these rural facing NBFC models and it happened in commercial vehicles so prominently those days.For full interview, watch videos...