What’s behind the market’s resilience? Even the shallow dips are getting bought into.
There is this whole preponderance of liquidity in the market. Earlier we used to see liquidity surge from FIIs. We now find that a liquidity surge is coming from domestic investors as well on a sustained basis. If we look at corporate earnings, the resilience is clearly visible. Therefore, the dips will get bought.
What is a good buy on dips now? Nifty Metal index is down 10% from its recent high. Can metal stocks be one such buy now?
I think we continue to remain bullish on the entire commodity play. We continue to believe that capacity utilisations are going up and prices are increasing. An increase in volumes would be good for most of the commodity stocks.
What is your outlook on Jubilant Pharma?
Jubilant Pharma is not on our radar. The rerating is not yet clear. I think it is better to focus on the larger pharma companies.
How are you looking at the overall PSU basket given the privatisation trigger?
PSU banks have been a rank underperformer for several years now. They have been struggling with capital because NPA ratios have been very high for most of them. Fortunately, the provision coverage ratio this time around is upwards of 90% for many banks right now. With such large provision coverage ratios and with the CAR ratio now around 14-15%, many PSU banks are looking quite strong from a balance sheet perspective. The worst of the NPAs is now over. With the pandemic recovery now setting in, banks should be able to get into a recovery mode quite swiftly. We have witnessed this in large PSU banks. The smaller PSU ones are catching up right now. So for the next 3-6 months, PSU banks would be better off relative to the market.
