One of the TV Channel spoke to Radhika Gupta, Director, Forefront Capital Management for her fundamental view and Hemen Kapadia of chartpundit.com for his technical view on various stocks and sectors.
Here are the expert views on various stocks/sector:
On Sesa Goa
Gupta is positive on the stock. “We are bullish on Sesa Goa and I think it’s a sector and a stock to be invested in for the long term if the investor has that kind of horizon. We are very bullish on the commodity space and on the metal space within that so we read that as a positive development and within that space Sesa Goa has consistently been in a favorable position so bullish on the stock overall.”
Kapadia is in sync with Gupta on this one. He says, “The stock looks good. We had a protracted decline. We are out of that, it’s stabilized and now it’s looking good. I would have a buy on the stock. It looks good from a medium to longer-term point of view.”
On Bharti Airtel
Gupta says if you have a longer-term horizon on telecom and Bharti then it’s not such a bad space to be in. She says, “We were fairly bearish on telecom but now we have become a little more neutral on the sector and Bharti is the best bet within the telecom sector. It has the highest growing market share, a good outlook ahead with the Zain deal that they have strong operations, but you need to have a longer term outlook in Bharti, maybe a year or two years to really reap the benefits. In the shorter-term we would be little bearish or neutral.” She also adds that she doesn’t see a major recovery coming back into the sector or into Bharti in the three-six months horizon. She says if the investor is looking at a shorter-term, he should probably exit and deploy that investment into more attractive sectors so like power, auto’s or pharma, something where he will see a shorter term gain.
Kapadia agrees with Radhika’s viewpoint. He says, “It’s going to take a long time. We have moved from Rs 260 to Rs 380 almost. I have a hold on the stock because it’s a technical weakness but it is getting heavy. The upside is getting tightly capped so six months I am not sure. Stock doesn’t look bad but the cream has been lost. We could be just walking into a correction, not yet but we are probably on the anvil of walking into a correction and that could take a few months or so.” He says to hold the stock and needs to extend his time horizon from six months to about two years or more.
On auto space:
Gupta says, “I think that perspective on Maruti is that while auto is growing sector, Maruti has seen fair amount of strong volume growth. If the investor has to be in the auto sector there are other individual names within autos where he is likely to see better growth in the prices because Maruti while the topline has been good because of the royalty payments, the bottomline has been hit and is likely to continue being hit. So, something like a Tata Motors or even a Mahindra and Mahindra in the similar space are probably more attractive investments.
On Maruti Suzuki:
Kapadia says, “I think the auto sector looks good, but I think most of the stocks have had run ups, no exceptions there. But I think Maruti will be a hold. I am not sure of the investor’s idea of selling now and buying back later can be practically implemented. Sounds good, but sometimes you could miss out on stocks in markets like these. So, yes, Maruti have moved up for seven weeks in a row. Its ripe for a correction, its overdue, it’s likely overbought. But since the investor has got a longer term investment outlook, I think it we will have a hold on Maruti. Maruti is in a longer term uptrend and we have just finished a 14 month-12 month correction so to speak and we will be back on track again. So, longer term point of view I would have a hold. Shorter to medium-term yes Maruti is probably susceptible to a correction.”
On Tata Steel
Gupta is bullish on the metal space. She adds, “We like the metals and within that the steel space as a whole. Tata Steel is actually one of the strongest plays within that space. Given the companies focus on cleaning up its balance sheet, managing debt, the news that we have seen coming out of Corus, management’s ability to execute over the last couple of years, in general Tata Steel is on very strong footing within this space.”
Kapadia finds Tata Steel a good bet in the long-term. He says, “We are back with a longer-term uptrend but currently the stock has moved from Rs 490 to Rs 680 in eight weeks or so and it’s also overbought. Maybe there is still some more upside till Rs 700 but if I were to buy for the slightly longer-term I will wait till it comes down to Rs 640 or below. I would avoid buying it at current levels because it’s had a run-up, so we could be walking into a correction which is probably overdue for the market as well as for Tata Steel.”
On Kalyani Steel
Kapadia finds Kalyani Steel an interesting stock. The company underwent some restructuring, so the charts have been slightly twisted but currently they are in the last stages of what is possibly an eight-nine week intermediate correction. He says, “Very strong support comes in at around Rs 130, I think downside appears limited, it seems to be setting the stage for an up move. Once this correction gets over, this could end in the next week or two, if not the next couple of weeks. That would set the stage for resumption of its intermediate uptrend and frankly speaking I would stick my neck out and say we are setting a stage for a 20-25% move in the next three months or so.”
On IT sector
According to Gupta this is probably a good time to exit most of the IT names. “We are pretty bearish on software as a pack. Couple of reasons, 1) rupee fluctuation will hurt them; 2) rising employee cost have been a problem for most of these software names and 3) then most of them are trading at fairly rich valuations. So the kind of earnings they need to show to justify the valuations are something that we think is unlikely to come in the next round of earnings. So they are looking overvalued and seeing margin pressures so weak thing for software and Infosys within that is one of the weaker and more overvalued players,” she feels.
However, Kapdia feels there is some upside left for the IT pack. “If you look at the entire IT lot—I think the Wipro, HCL Technologies—have posted 10 year highs. Infosys is at a all time high—short-term, medium term, long term all time frames and all counts it is in an uptrend.
On Infosys, he suggests a hold. “There I some more upside to go before the move fizzles out and the entire IT pack, even a laggard like Tech Mahindra probably looks good enough for a bounce right now so I have a hold on Infosys, I think there is more upside. Probably a Wipro or a HCL Tech might do slightly better than Infosys but Infosys is still a hold.,” he says.
Commenting on other IT counters, Kapadia says, the prospects of the Patni aren’t that exciting right now. However, he is upbeat on Hexaware. “We have had a 10-12 month correction. The time retracement has been there but price retracement has been rather shallow. Simply put, it is looking good and its coiling up like a though the breakout comes in at Rs 90. Hexaware looks exciting enough to warrant a close look and may be even a buy. So Patni doesn’t look too exciting, Hexaware does. In terms of Foursoft—that’s also moving sideways for once again this 12-14 month point of view. Looks okay but out of the three stocks—Hexaware looks to be the best of the lot. I think one can expect 30% upside from here in the next six to nine months,” he adds.
On Reliance
Kapadia says Reliance has been a bad underperformer but to expect Reliance not to perform would be a folly. He adds, “I have been tracking Reliance since my school days. Yes, it hasn’t moved but I think it has the capacity to surprise very much on the upside. I am not sure that an investor should sell call options of Reliance after 17 months of a sideways momentum and if he does he will have to keep a very strict stop loss. If the investor does sell call options he will have to calculate his cost in a sense call option plus the premium gain and if that and the spot price and the futures price crosses that, he will have to hedge it by going long in futures. It’s highly complicated, and slightly dangerous. In fact if Reliance dips a bit I would suggest selling put options because I am bullish on Reliance and not bearish. But frankly speaking just to make up for the losses selling calls and puts are very dangerous. I think you would loose two years of money that you have made in futures and options when you take such dangerous strategy especially in the market open with a gap sometimes. I would suggest a hold on Reliance. I think by the time the bull market comes to an end Reliance should be Rs 1,300 or more.”
On Reliance Capital
Gupta finds the financial space well placed. She finds that Reliance Capital hasn't done much. “Fundamentally it's not a bad business. It is the largest asset management company (AMC) in India. One of the few that's profitable although the insurance side has suffered a loss. I think there are other players in this space like an IFCI or an LIC Housing Finance that have done a lot more and have a much sharper growth trajectory ahead of them. So I would advice the investor to look at that a little bit.”
Kapadia has a buy call on this stock despite the fact that the entire bull market of the last year or so has given Reliance Capital a complete miss. He adds, “Currently we are in the midst of what is possibly a rounding bottom on the week. Maybe it looks like an inverted head and shoulder. Simply put, there is a bullish formation at play. Maybe it takes some more time and at the risk of sounding silly maybe the bull market gets over by the time Reliance Capital moves. Technically speaking it looks great. We haven't had a deep price retracement so despite its deep underperformance I have a buy on the stock especially if you have a year or two investment horizon.”
On Banks
Kapadia doesn’t track the financial sector but agrees it looks good. “All time highs but no resistance levels so I would have a hold. I think we could be moving towards maybe Rs 450 or so in the next couple of months.”
“Bank of Maharashtra looks relatively better in the sense we have some more history in terms of an upside. There is headroom. There is resistance at Rs 74. If you take that out from a weekly point of view I think we could be moving towards Rs 85 or so. Like most banks it’s in an uptrend, looks good and I think one can expect further upsides. I also find Dhanlaxmi Bank looks good.”
