Tips for Trade: Go for L&T, avoid PSU bank stocks
On our show Tips for Tomorrow, Ashutosh Sinha, Lancelot D'Cunha, CEO at Sharyans Wealth Management and Gaurang Shah, Assistant Vice President at Geojit BNP Paribas Financial Services discuss the performance of the market and give stock tips to investors.
It was a range-bound session for India’s equity market on Monday. Markets ended in the negative territory after a shaky start due to lack of trading volumes in cash and futures and options. The BSE Sensex index closed down 1.51 per cent at 17,221.14 points, while the NSE Nifty index ended at 5234.40, down 1.66 per cent.
Metal and Capital Goods were amongst the worst hits. Pharmaceutical stocks held up marginally.
On our show Tips for Tomorrow, Ashutosh Sinha, Lancelot D'Cunha, CEO at Sharyans Wealth Management and Gaurang Shah, Assistant Vice President at Geojit BNP Paribas Financial Services discuss the performance of the market and give stock tips to investors.
MARKET VIEW
In Lancelot D'Cunha’s view, markets may remain weak with a negative bias. “Declining volumes is a sign of worry. The Nifty is expected to trade in the range of 5170-5450,” he said.
Gaurang Shah sees the Nifty retesting the 5135 level. He advises investors to allocate 25-30 per cent in equities; however, he sees overall buying interest declining. He said the fears over General Anti- Avoidance Rule or GAAR continues to be an overhang. “Fourth quarter (Q4) earnings, credit policy are cues to watch out for.
RBI MONETRY POLICY
D'Cunha does not expect the RBI to cut interest rates. As far as bank stocks are concerned, they look fairly valued currently, he says adding the PSU Banks are likely to face pressures on the non-performing asset (NPA) front in the fourth quarter.
Shah expects a cut of 0.25 per cent in the repo rate whereas no cut in the cash reserve ratio (CRR). Inflation concerns still remain, he says.
According to him, bank stocks are nervous because of provisioning issues. He suggests avoiding PSU banks at current levels. He prefers private sector banks at current levels instead.
PICK OR DROP CAPITAL GOODS STOCKS?
D'Cunha Likes L&T, BHEL, Crompton Greaves in the Capital Goods sector. “Topline growth in this sector may decline but bottom-line will improve given the focus on lower commodity costs,” he said.
According to Shah, concerns over order execution will remain. “Expect profit booking in L&T. Buy Capital Goods stocks selectively,” he suggests.
Q4 EARNINGS
Company margins are likely to remain under pressure in the fourth quarter, says D'Cunha.
On the other hand, Shah says, the earnings season will be in line with estimates. “Real Estate, Airlines stocks may underperform. Auto stocks expected to do well,” he added.
INFOSYS GUIDANCE
D'Cunha feels that Infosys guidance may drive stock performance.
In Shah’s view, Infosys fourth quarter earnings will be in line with estimates. “The stock can trade with a stop loss,” he said,