Sashidhar Jagdishan, who has been associated with the bank since 1996, will be the new CEO of HDFC Bank Ltd. Jagdishan has been a part of the inner circle of top executives who were seen as responsible for setting up the bank and spearheading its growth, Umesh Mehta, Head of Research, Samco Group, said in an interview with Moneycontrol’s Kshitij Anand.
edited excerpts:
Q) A week which was controlled by bulls as Nifty managed to climb above 11900 levels. What led to the price action on D-Street?
A) The Nifty50 took a breather in the week gone by. FIIs have poured in money this week but this was balanced out by DII’s outflows. In fact, global nerves are running high on the outcome of the US elections.
All in all, the worst seems to be behind us and the situation seems to be steadily improving. Last week’s bullishness lingered mainly due to better than expected results by India Inc which led to a surge in various pockets as well as the benchmark indices.
Hence, last week’s price action cannot be attributed to a single factor but it was a mixture of both micro and macro factors.
Q) As we approach the last week of October, which is also the expiry week, what are the important levels that one should be tracking? Any important event to watch out for in the coming week?
A) The Nifty 50, after a swift rally, is consolidating around resistance levels of 12000, which is an important level from the market as well as option writers' perspective.
The short-term support is now placed at 11600.
As the market is getting rejected at higher levels and global equity indices have underperformed our bourses, the key event the entire world is waiting for is the US presidential elections. But till then, markets could remain in a status-quo. This month’s expiry is likely to be below 12000 strikes.
Q) Even though benchmark indices moved in a range we saw bigger price action in small & madcaps. What are your views on the broader market? Small & Madcaps have usually performed better in the run up to Diwali and in the December quarter?
A) Price action in small & midcaps was seen due to a combination of factors including investors looking to diversify their wealth, companies available at depressed prices, initial signs of recovery in the Indian economy, low-interest rates, and liquidity.
The rally in the broader market is expected to continue at least until the first week of November when high volatility will cloud the Street due to US elections.
Midcaps usually perform better in the December quarter due to festive buying and positive sentiment, but there is no fixed rule that it will perform better this quarter as well.
The year 2020 has been really uncertain due to the pandemic and investing in small & midcaps lead to higher risk.
Investors are advised to buy in a stock-specific manner based on their risk appetite but should focus more on large caps for safety purposes.
Q) Sectors like Realty, Telecom, and Metal stocks led the action on D-Street. What were the factors which led to the price action?
A) Metal stocks are inching upwards on expectations of a US stimulus, a positive for the asset-based metal companies which are trading at attractive valuations.
In the case of realty companies, prices of residential properties are slowly gaining traction as the affordable and midsize housing market begins to improve steadily.
Telecom stocks on the other hand are witnessing buying due to lower valuations after a sharp correction.
Q) Top 3-5 technical trading ideas for the next 3-4 weeks?
A) In the near-term we may witness a certain amount of sectoral rotations with profit booking in Cement, FMCG, Pharma as well as IT sectors replaced by buying in Infrastructure, Refinery, Oil & Gas, Hotel and Tourism.
Broadly, markets should keep an upbeat mood at least until the first week of November.
Investors are advised to wait and watch and buy only on healthy declines. However, well-capitalized private sector banks can be accumulated at lower levels.
Q) New CEO will be taking charge of HDFC Bank from 27 October. It has been a wealth creator for investors under Aditya Puri. Are you confident of another bull run for the stock?
A) Sashidhar Jagdishan, who has been associated with the bank since the year 1996, will be the new CEO of HDFC Bank Ltd. Mr Jagdishan has been a part of the inner circle of top executives who were seen as responsible for setting up the bank and spearheading its growth.
This allowed him to be at the forefront in key strategy making decisions on which the mammoth private sector lender has blossomed. And as the outgoing CEO said ‘A lot has been achieved in the 26 years of HDFC Bank Ltd., but the best is yet to come.’
The private sector lender is now one of the largest in India in terms of outreach, balance-sheet, number of customers, and market capitalization.
Given that the biggest strength of any organization is its employees and systems in place - HDFC Bank has a really long runway ahead where it can unfold itself into an even bigger global mammoth financial service provider.
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