Where do you stand on ITC right now? Do you think it is at the cusp of what Bharti was about a month back when you were going to see a big move on the stock price and a big rerating in that sense?
The performance has been nothing in a year. From Nifty at 9,000 to 17,000 plus today, the price performance of the stock is almost the same. It has been a solid disappointment for investors who like ITC just for the valuation comfort.
ITC as a part of the portfolio has turned out to be a disaster. I personally believe that in the near term, just because the markets have moved up, the stock will go up. But I do not think anything major is going to happen in ITC. If you see the last three years’ performance vis-à-vis other consumer pack stocks or other FMCG stocks, ITC has been an underperformer. I would avoid the stock and look for other opportunities.
Give me two reasons why the market will not correct and you are not allowed to use the word liquidity because that cannot be the only reason why markets are going higher?
The market has not been correcting. The shift is from the midcaps trades to largecaps. We saw the shift in August and the same is repeated this month as well. Liquidity is one of the factors. There also has been a shift of trade. The underperformance of midcap stocks have continued. A few largecaps which underperformed have recovered. What we saw in Reliance, we are now seeing in HDFC Ltd. which is catching up. In some time, we would also see that in Kotak. These two-three stocks will contribute on the Nifty front and take the indices higher and higher.
