Tips for Trade: Sell RCom, DLF; Buy Sterlite, realty shares
On our show Tips for Tomorrow, Vivek Mahajan, Head-Research at Aditya Birla Money and Raj Majumder, CEO of Auroch Investment Managers discussed the market performance.
The Indian equity benchmarks saw a lot of movement on Thursday. The broader NSE Nifty closed above the 5,400 mark for the first time since August 2011 while the BSE Sensex index remained a mere 1 per cent away from 18,000 levels. Bank Nifty too hit a 6-month high.
High beta stocks led the momentum with Infrastructure and construction stocks among the top gainers while Pharmaceutical stocks underperformed.
GATI, Dhanlaxmi Bank stocks were among the big movers on the index while Manappuram Finance, ARSS Infra, Adani Power and Coromandel International were among the big losers.
On our show Tips for Tomorrow, Vivek Mahajan, Head-Research at Aditya Birla Money and Raj Majumder, CEO of Auroch Investment Managers discussed the market performance.
On Nifty crossing 5,400 mark
According to Vivek Mahajan, Nifty may rally another 1-2 per cent. He also felt that the levels of 5,500-5,600 are easily achievable. “A minor correction cannot be ruled out,” Mahajan added.
However, Raj Majumdar preferred to remain cautious although the momentum remains strong. “A bout of profit booking likely,” he explained, adding that Liquidity push will continue.
“Outcome of U.P. elections will be a key trigger for markets,” said Mahajan.
On Bank Nifty
Experts also spoke on Bank Nifty’s upward momentum.
Mahajan reasoned that the Bank Nifty has improved on the back of a liquidity driven momentum seen in the banking sector. Further, he said that he remained bullish, particularly on private sector banks.
However, Majumdar said that concerns remain on asset quality and non-performing assets for another quarter, although they have already been factored in by the stock markets.
He feels that the market is focusing on election results, the Union budget and possible rate cuts by RBI.
Mahajan preferred Bank of Baroda stock as his top pick among PSU banks.
On Metal Stocks
In Vivek Mahajan’s opinion, Sterlite Industries is the top pick in the metal sector. He said that liquidity is the key factor in boosting metal stocks. He further expects infrastructure activity to pick up ahead.
Majumdar, meanwhile, felt that the positive momentum is due to a rebound from being oversold.
They both felt that any pick up in construction activity will drive the metal stocks up.
On DLF Q3:
Vivek Mahajan expects the DLF Q3 earnings to disappoint. The street expects a 3.6 per cent year on year rise in sales at Rs 2,570 crore as against Rs 2,479.9 crore for the same period last year. Profit After Tax (PAT) is likely to fall 11.6 per cent to Rs 417.8 crore from Rs 472.9 crore in the year ago period.
Meanwhile, investors are expected to exit and book profits in DLF in the short term. Majumdar feels that Long term investors can remain in DLF as momentum remains strong.
“A 15-20 per cent upside is possible for DLF,” feels Mahajan.
On RCom Q3
Both Mahajan and Majumdar felt that it was better to avoid Reliance Communication.
RCom is expected to post a 2.5 per cent rise in income at Rs 5,165 crore on quarterly basis; but see a 12.5 per cent decline in PAT at Rs 220.5 crore for the same period.
However, they expect the company to disappoint the street in its Q3 earnings.
“Its valuations are below Bharti Airtel. So don’t see much institutional holding in RCom,” he added.
Mahajan said that governance issues may continue to plague the telecom industry.