There is a looming power shortage. , NTPC, Coal India have been going up. Is there any opportunity to play on this story or is it done and dusted?
All these shortages are temporary in nature. I do not think there will be a black Diwali. I am sure things will work out in terms of near term play. But obviously, the power theme as a whole is going to be there for at least one quarter or so, till the time things settle.
There are three stocks and obviously the clear winner is Tata Power. The visibility of earnings both in terms of the company’s performance plus the shortage issue obviously augurs well for them.
Second, Coal India is one of the stocks which has underperformed for two, three years and in the recent theme of PSU pack coming back into action again makes it more viable. Coal India and Tata Power remain the top bets in this basket.
When crude oil prices go up, what does it mean for equity markets?
Obviously the correlation is when crude prices go up, the market also tends to perform better. In 2004-05-06-07 or maybe later also, higher crude prices have seen robust markets. But this time, all commodities have gone up, it is not only crude. Crude has been the last to go up in the rally. This time, the rally in crude is different from earlier rallies.
Do you think ahead of the festive season, autos should do well?
There are other pockets to look into and whether I would invest into the auto ancillary names rather than putting into auto stocks. For example, it seems a 20% move in
is possible from here. The stock has done nothing. It is available at a very cheap valuation of 25 times forward.
I do not recollect when I last saw an MNC going at such a cheap valuation. So, one should look at that. is another name where a 15-20% upside is possible. So I would play auto ancillaries rather than auto stocks at this juncture.
