The earning season is behind us. The FIIs have staged such a strong comeback. Before we get stock specific, any call on the index?
As you rightly pointed out, after seven-eight months of selloff from the FIIs, in the last couple of weeks, FII numbers are improving on the back of the improving data. We see the macro data improving. Globally, the inflation has started cooling off. I think the commentary is now better than what it was a couple of months back.
So all these factors are indicating that this rally could continue for some more time. The sector which is performing best is financials. These stocks were hit hardest last November or so when the FII selling started and we started hammering that for a couple of months. Post that, we have been buyers in that sector.
My sense is obviously the macro data has been improving, the large private banks reported a very strong set of numbers and there’s clarity that going forward, they will deliver well in next few quarters as well. I think the markets will continue to rise. We will see a new high at least in the first week of September.
Last month, what are the three stocks which you have told your clients to buy and which are the two-three stocks which one should lock out of in the short and medium term to book some gains?
One thing was very clear that financials look very promising. In that space, we have been asking clients to buy
. The second is . The stock has been a underperformer vis-à-vis the entire banking sector and can lead the rally from here. It is available at very good valuations now. Third, the State Bank of India. The numbers were a little below what the street was estimating but it looks like for the next few quarters, the numbers would be strong for PSU banks. The should lead the rally. These are the three stocks we have been recommending to the clients.
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But what stock to avoid is a very tricky question at this juncture when we see that markets have been doing well and we are seeing the participants from a broader perspective. But, one should avoid new-age businesses. There are a lot of other opportunities available in the market.
Is the best of the gains in autos behind us? In the near term, are auto stocks likely to consolidate or correct more rather than continuing the momentum?
It might be. The stocks have run up quite sharply, especially in the two -wheeler space, we might see some consolidation in the stocks. But in the case of passenger vehicles, Maruti vis-à-vis other stocks have not performed the way other four-wheeler companies have performed. I think passenger vehicles like Maruti should continue to do well and the response to new launches like Brezza and Grand , has been quite strong. There are 70,000 bookings for Brezza and 20,000 plus bookings for the new Grand Vitara.
The product line should continue to do well in the next couple of months. The balance sheet strength is quite strong and post Covid, the demand is going to be much better. My view is Maruti should be an outperformer. In the two-wheeler space, both Bajaj Auto or Hero Honda will consolidate for sometime while Eicher could be better off.
Which is that one stock you say is expensive, it is overbought you cannot justify it in sheet there is no math to define and call it a value buy, but you will still be a buyer and you are in no mood to sell?
The QSR segment looks expensive and it looks like the stocks will continue to do well going forward also. So they will remain expensive but will continue to hold on to it. That segment as a whole looks very interesting.
and both look quite interesting.