The straight market rally had surprised everybody. There was a small blip yesterday. Today also we have seen a stock like IRCTC take it on the chin. How are you reading this?
The markets moved 10% in a month and a half. As no correction had taken place in the near term, the stumble was warranted. A lot of stocks had moved up without any reason, because of a speculative element. In yesterday’s trades, only these types of stocks had corrected. IRCTC went up from Rs 4,000 to Rs 6,300 odd or so and is now correcting or taking a breather.
My view is investors have to be very cautious in terms of the stock selection and also the valuation at which they are buying the stocks from here onwards. There are a lot of opportunities in the overall markets but one should be very cautious in terms of picking up stocks. At such higher levels, one should not compromise quality against just beta or a catchup in the market momentum.
Real estate index is off an 11-year high. The expectation was and is that this is real estate’s time, it is time to buy property, offices are reopening. Prices have not gone up and usually a boom cycle lasts for many years. Would this fall be an opportunity to accumulate or buy?
The real estate stocks were at 11-year high and the overall data show the number of new registrations has been spiking up month on month. A lower interest rate regime has helped this trend continue. Largecap or smallcaps all stocks have done quite well. My sense is that in such a scenario, real estate stocks will continue to do well. Wherever the stocks are offering good value propositions like DLF looks very attractive from the current levels.
Similarly, Prestige Estates looks very promising. There could be 15-20% upside in the stocks. I would like to add that the biggest beneficiaries of the real estate boom are the housing finance companies. So the biggest gainer should be HDFC Ltd vis-à-vis the entire real estate pack.
Financials have underperformed and one should play HDFC Ltd to benefit from realty boom. Another one is CanFin Homes. It is again available at a very reasonable value.
What is your assessment on Jubilant Foodworks?
The QSR segment has been in a momentum — be it Burger King, Jubilant Food, Devyani International. The biggest challenge again remains on the valuation front. One should avoid Jubilant Food for at least near term because of the stretched valuations.
IEX has also been on fire. But today the stock is under pressure. How would you approach it?
The stock has done quite well and that is when we covered it and the target has been breached. The stock has moved up quite sharply ahead of time and ahead of our expectation as well. It was time for booking profit. I would advice that one should wait a little bit more for a correction before picking up the stock again.
Cotton prices have really gone up. Exporters are getting more business. The Prime Minister inaugurating textile parks as well?
There has been an economic recovery and a lot of manufacturing businesses have come back. The updates from the banks indicate that the overall economy and the cyclical stocks and sectors are looking alright. Textiles is one of the sectors that has done very well.
We are seeing a lot of stocks in the retail segment like Aditya Birla Fashions has been done quite well. But I would advise to go for larger quality names. My top bet is ABFRL. There could be another 15% upside in the ABFRL from current levels.
