Sanjiv Bhasin, Director, IIFL Securities, says “FIIs’ underweight will turn into medium weight and overweight. But the real proxy to this bull run is the retail investor. Anybody who has a SIP is making money and that undertone of SIPs going down under and all is hogwash. This is where equity as an asset class will remain the preferred choice. We are an expensive market. We will remain so. But that is what bull markets are all about. You have to be there to make money and enjoy the party.”
What a wow Monday it turned out to be but there’s a lot of FOMO feeling as well. People thought they were under participating in the move that one has seen, at least in the large caps. Give me three names where you can still buy?
Super Monday and super month. One month can make so much of a difference. I remember 25th October was my birthday, and I got a lot of people and everyone was doom and gloom. I gave them stock picks and I told them new highs are here. Nobody believed. But you know, by the grace of God, India is in an outperform market and the biggest fools now are the biggest buyers. So that frenzy will continue.
FIIs’ underweight will turn into medium weight and overweight. But the real proxy to this bull run is the retail investor. Anybody who has a SIP is making money and that undertone of SIPs going down under and all is hogwash. This is where equity as an asset class will remain the preferred choice. We are an expensive market. We will remain so. But that is what bull markets are all about. You have to be there to make money and enjoy the party.
I am of the opinion the party is on. We are going to be in largecaps. We have taken chips off the midcaps, we are putting them into largecaps. Three names, which I can suggest would be HDFC Life. Insurance stocks are no-brainers. These stocks are hitting new highs. HDFC Life now has access to Exide Life, which they took over and in smaller areas. With yields on the softer side, they are going to have very, very good, treasury income and so on. So HDFC Life is my top pick, I think Rs 750 was the previous high. We are going there.
Second would be Godrej Properties. Now Godrej Property is a proxy to gold and the stock is hitting all time highs. Real estate is the best proxy for fixed assets and who better than Godrej Property? I am staying in DLF and just closer to us there is an area called SPV. He has launched a new product at 20,000 square feet. I am sure Godrej Properties is going back to that Rs 2,500 level which it hit maybe last year.
The third would be L&T Technologies, LTTS. Their presence in the defence and allied areas makes it a very good choice. This stock is hitting Rs 5200 and I would put these three pedigree names in that order.
Any pockets where you would say the rally has run its course and one should take some profits off the table.
I do not want to chase power and we have made by the grace of God a lot of money and we want to preserve that. I am more optimistic on Bank Nifty, which has been a huge underperformer and I am very, very optimistic. Power is something I would take, lock, stock and barrel off. Leave the rest of the 10% of 15% for someone else to make money. You should sit out on that and power your own portfolio with large caps.
You mean the finances, just want to clarify PFC, REC, IREDA types?
The whole basket – NTPC, PFC, REC. You have to be leaving something on the table. Do not chase these stocks at these values. There is a frenzy over there, be cautious but it is not that they cannot run up more. I am of the opinion that is a lot fair, but a large part of the fair and the over one positions are there and they are riding a huge boom which was missing for the last 10 years.
I am not in a position to say when they will top out but if you leave something on the table, you will always be happier and you made money. And there are enough stocks on the cap side which are giving me comfort where I would be happy with a 12-14% return over the next few months. I do not want to chase 25% per month but even lose some of my capital.
Meantime, I want to get your take. Within the footwear space, Metro Brands has seen a pretty strong rally of late. The strategy of premiumisation clearly has been working, whereas some of the other peers within the space like Bata or Relaxo have not quite been up to the mark. Does Metro stand out among the lot?
Tata Power is one of our top bets. We think that their underperformance is now going to come out an outperformer. We have a target of Rs 350 as a disclosure. This is in our portfolio. On Metro Brands, clearly, it is evident that the spending patterns, the type of frenzy you are seeing in Nykaa and Mamaearth and so on, you would rather buy an asset, which is going to be more durable. And Metro Brands has been very key in outperforming. Their presence in a large part of the metros and now smaller cities is gaining attraction. I think this is a very good consumer play, which you have on consumption.
The stock has been on a tear since a long time, but declines would be a good opportunity to get in. However, do not chase value at this time since I said large parts of the largecaps are giving a lot of comfort to be over there, particularly the banks and some of the insurance companies.
What about your outlook on some of these recent listings, Honasa, IREDA, some of the more muted ones as well? Do you believe that some of the valuations here are justified or the attention or the kind of subscription figures that we have seen? What does a long-term story hold for a lot of these companies?
Two, three years back, they used to trade at 0.3 0.4 times price to book. REC, PFC and IREDA now get a premium of almost two times price to book. Generally, historically, when PSUs start to be two times price to book and they look the best bets; that is the time you should take money off the table. I am not chasing any of these. I think a large part of the rally is already built in. They have had a superb run. You have enjoyed the party, try and look for other sectors which have enough valuation comfort.
On Mamaearth and others, now there is going to be a lock-in and you will have some of the others who will want to sell out. Today also, there is a particular deal. So we are avoiding this space. This is a very competitive space. You will have to wait for two, three more quarters, let some of the old hands try and get out of this because they will always be this frenzy for others to get out. And the key has been in some of these newly listed stocks which are private equity owned. There is an entry and an exit for a lot of investors.
So I am saying go with the tried and tested. You will have at least more security and not miss the bull run by buying some of the Nifty stocks rather than chase some of these new entrance which have already run up a lot. So caution on that side, but yes, fully bullish on the index and the index stocks.