Rohit Srivastava: While a breather would have been nice, it does not look like that might happen because there is a lot of rotation, different parts of the market, different stocks are continuously finding buying interest and rotation is what ensures that after some consolidation the market again bumps up.
The only thing is that we should not expect the same speed that we saw from the April lows which was more of a panic situation, from where we moved up very fast. We may see a slow and steady continued upward move with higher highs, higher lows in the key indices. So, this looks like a long duration consolidation with expiration only tomorrow, we should be coming to the end of this congestion zone and start breaking out from it on the upside is what I am anticipating, but slowly and steadily heading higher is how I look at it.
I want to get your view on the two earnings candidates that we have today. LIC and Hindustan Copper, both have had a stellar Q4. What are the charts indicating for these?
Rohit Srivastava: I cannot give stock specific comments, but Hindustan Copper being in the metal space is an interesting place to be. Metals have seen a good move in some of the stocks and on a 6- to 12-month basis, you will continue to see that because of growing liquidity and possibly a stronger turn in the commodity cycle that has still not happened in full swing, but I do anticipate that will happen at some point of time.
What is the outlook on the defence pack? No stopping for this particular sector. For stocks like BEL, HAL, there is no stopping anywhere even in today’s market. Give us some sense that you believe there are more legs to this particular up move that we are seeing?
Rohit Srivastava: We are sure in the longer-term, but every time we see something go up one way, you would like to pick it as and when there are pullbacks. I think the longer-term uptrend remains intact for the sector, and so that is not an issue. You want to time your entries and not be buying too far high into the moves that is the only near-term thing but yes, it has become a pretty strong move with very few pullbacks and it is being backed by what we are seeing around the world which is more and more spending on the defence side.
What is your view on the telco and chemical space which have been in focus of late. What are your sectoral views on these two? Do you think rallies are on cards for these?
Rohit Srivastava: Those are not sectors that I focused on a lot, specifically chemicals. It was a long-term underperformer for a period of time. At some stage, you would think that it comes out of that and you start seeing a meaningful move in the chemical sector longer term, not sure that has started to happen. In the telco space, we are seeing that. We have seen the breakout a couple of years back and consistent momentum, but of course these stocks are very limited there. We are down to focusing only on one or two of the big majors that are driving that entire move. So, you do not have that much choice, as you do in chemicals across a list of stocks that is the only difference between the two.
Why don’t you tell us which sectors you believe can be the outperformers and underperformers in maybe the next couple of months?
Rohit Srivastava: Financials stand out. They have done well. They have led the rally since January when the market was falling. So, financials will continue to drive the interest through this move especially given the interest rate cycle and within banking and financials, I would specifically like NBFCs as a focus area because they tend to do better when things are good.
It is also a place where valuations are low, so it is not just the momentum of the sector but also the valuations. The same can also be said to some extent about PSU stocks which had a huge correction in between June of last year and the recent fall where from being extremely overbought many of these stocks have become oversold and slowly are building a base. Some of them are probably powering ahead faster as you discussed defence, most of them being PSUs. The others are moving up much more slowly and are across segments. So, whether it is PSU banks or whether it is in the oil and gas area or whether it is in power finance and so on, all of them will eventually participate again on the next move up. PSUs remain a low value pick which are less risky and that will drive a lot of this move.
Lastly, there is the metals pack. The metal sector is where the commodity cycle is due for a turn up. We have not seen metal prices move up a lot recently while the demand remains, I think the commodity cycle will kick in, so far as within commodities you are only seeing gold and silver do extremely well, but copper has held out well, most of the other base metals have not but I think that should eventually play out as the rate cycle continues to move to the downside.
