Sangeeta Purushottam, Head Institutional Business at Religare Securities expects to see a further rally from current levels since the market traditionally gives positive returns in December. She has a view that the Sensex is likely to cross the 20,000 level again due to the positive sentiment.
Sangeeta also thinks that a lot of midcaps have strong fundamental stories and are trading at discount to valuations. She adds that one can buy growth & value in the midcap space since domestic liquidity tends to favour midcaps.
Excerpts from the exclusive interview with Sangeeta Purushottam:
Q: Do you think a December rally is shaping up or do you think we will get pegged back into the range again?
A: We should see a rally from hereon as we have traditionally seen in the month of December. I don’t see any reason to believe that this year should be too different since it is not just the foreign money but also a lot of local participation, which tends to increase in December in anticipation of likely foreign flows. We are going to see a December rally this month as well.
Q: Do you see us getting back to those new highs and climbing significantly higher highs, because the last couple of times we attempted that, we have not managed to cross those 20,000 and 6,000 kinds of levels very convincingly?
A: I think we will probably cross the 20,000 level. I think we were certainly going to attempt to get to those levels once again. I can’t say whether we will cross them or not, but I think we will see overall a positive mood as we get further into the month.
Q: What has stood out this time is the breath of the market. Is it just local euphoria or do you think there is a genuine case for midcap out performance throughout December?
A: It’s a bit of both and there are a lot of the midcaps who do have good stories and as the overall market valuations have gone up, you find that many of them actually trading at a discount to these valuations with growth rates which are fairly attractive and are likely to sustain. There are fundamentally good picks across various sectors available but you get them by growth and value in the midcaps space which is largely not possible in the large cap space today. So there is a bit of that plus there is the domestic liquidity, which does tend to favour the midcaps.
Q: What is your take on what is going on in the power space? Reliance Energy and Tata Power are up 10% apiece today. How did you read the news of promoters putting in more money in Reliance Energy and what would you do with the power utilities now?
A: If you are looking at promoters putting in money in any company in general, that is seen as positive because it indicates the confidence that promoters would have and it leads to a general assessment that stocks are likely to move up from there.
But honestly, we have really not been convinced about what has been happening in the power utilities space, because I think a lot of it is really getting discounted upfront. These sectors have long gestation periods, returns are capped and to see this kind of discounting happening so much in advance of projects taking off, just doesn’t make sense. Maybe we are just being old fashioned in the way we look at it, but it is not very convincing.
Q: How are you accessing the global situation because in November when the market turned volatile, people had their eyes fixed on what was going on globally? Do you think in December we have settled down with that or can one expect some more volatility from those kinds of sources?
A: It is too early to say that we have settled down. There can be the news flow changes but there can be further bouts coming through because it really depends also on how the US earnings season goes. That will be another indication of what's actually happening there. So that could be a possible source of global volatility and I don’t think that it is over quite yet.So that’s something that will create short-term turbulence or has the potential to create short-term turbulence in our markets as well.
Q: Interest is coming back to the infrastructure space again. Stocks like GMR, Lanco, JP Associates have also started moving. Is this space as richly valued as the power utility space or your more comfortable buying into these stocks?
A: The overall story of the infrastructure sector remains fairly strong but the stocks are pricing a lot of that and most largecaps frontliners, mini sectors are fairly richly valued. That doesn’t mean that they may not get more expensive or more richly valued from hereon because the momentum of money tends to flow into certain sectors which get into fashion but there is a fair amount which is actually being captured here. On a relative basis, I would say that we are relatively more comfortable with the infrastructure space than with the utilities space.
Q: How are you looking at autos? We have seen the monthly numbers now but we have seen two stocks actually tear away with Ashok Leyland in the CV space and Maruti has been doing very well. Would you back any of these two?
A: Not really. The auto space has value in it certainly. This sector will start looking up between say the next 3 to 6 months and within that sector, there are certain segments like the car space for example which we think is going to get extremely competitive with a lot of new model launches happening and new entrants coming in over the next 12 to 18 months. So that’s going to hurt margins and consequently we think that margins have actually peaked out particularly in the car space.
There could be a rebound in the commercial vehicle numbers, which have been down but between the two leading stocks our preference really has been for Tata Motors.
Q: How would you approach the market over the next 4 to 8 weeks? Do you think the market will be driven by local momentum traders, in which case it is prudent to actually chase some of the momentum outperformers or would you seek some of the contrarian sectors which haven’t moved like IT for value? What's the better way to position yourself from a tactical perspective over the next 4 to 8 weeks?
A: If you bet on value, your horizon has to be longer than 4 to 8 weeks because you can never be sure when markets starts giving the value or the benefit it deserves. So it’s always very dangerous to bet on value with a short-term perspective. You can do that when you are investing for a year or longer than that because when you buy value, you also have to be prepared to hold on for that value to actually emerge. So tactically, momentum is likely to do better than value, particularly if you are looking at a short-term horizon.
Source: Moneycontrol.com
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment