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Tips for Trade: Market to be volatile ahead of Budget, bet on banks

On NDTV Profit’s show Tips for Tomorrow, Lancelot D'Cunha, CEO of Sharyans Wealth Management and G Chokkalingam, ED & CIO of Centrum Wealth Management discuss the market performance of the day.

James Murdoch with father, Rupert Murdoch
James Murdoch with father, Rupert Murdoch

India’s equity benchmarks fell sharply from the day’s high on Wednesday as renewed concerns over economic growth dampened the investor sentiment. Although the BSE Sensex ended flat at 17752, it was down 250 points from the day’s high of 18,001. The Nifty index erased early gains of 80 points to close at 5,385.


The third quarter gross domestic product (GDP) grew at 6.1 per cent, falling short of consensus estimates that had pegged GDP growth at 6.3 per cent. This is the slowest pace of economic growth since 2008.


However, the oil and gas stocks gains were led by gains in ONGC ahead of the divestment auction.


On NDTV Profit’s show Tips for Tomorrow, Lancelot D'Cunha, CEO of Sharyans Wealth Management and G Chokkalingam, ED & CIO of Centrum Wealth Management discuss the market performance of the day.




MARKET OUTLOOK


Lancelot D'Cunha expects that the market will be volatile ahead of the budget. “Expect FII flows to continue,” he added.
Chokkalingam also expects FII money to flow continuously. “Reversal of the interest rate cycle is a positive for the FII inflows,” he said.


He is very bullish on the markets. “Upside is possible from current levels with little volatility. Anticipation of a CRR cut and benchmark rate cut is also a positive for the market,” he added.

ONGC AUCTION


“ONGC auction is a good entry point for institutional investors, but not for retail players,” said Lancelot D'Cunha. He feels that the subsidy sharing mechanism is still an overhang.


Chokkalingam said that the auction trigger is not for the company but for the government. “Rs 12000 crore will help the government reduce fiscal deficit,” he explained.

CAPITAL GOODS SPACE


D'Cunha feels that more order inflows will be positive for stocks like L&T and BHEL as order book growth was a big concern for these companies.


Chokkalingam maintains a negative view for companies like BHEL and L&T for the short term. “Interest rate cut is a positive for BHEL, L&T and also for the entire sector as a whole,” he clarified.

BANK STOCKS


In D'Cunha’s opinion, banking stocks are fairly valued.


Chokkalingam sees no value in State Bank of India. He is comfortable with Axis Bank as he feels that it is better managed than other PSU Banks.