UltraTech, Welspun India & Indian Hotels good long-term bets: Sudip Bandyopadhyay
This week was very sector specific from a news flow point of view, as we saw a lot of momentum around the metal space with aluminium. There were a lot of small activities that took place throughout the week but in general a trigger was missing that could drive the market going forward. What do you think can be the next big trigger as I think the market has by and large digested all the central bank action whether it is the Fed or ECB in terms of taper. So what will the market look out for next?
You are absolutely right. What was missing for the market was a major trigger both on the upside and the downside. The market kept on moving sideways and was in a bit of a consolidation mode throughout the week.
We did see some amount of profit taking at higher levels and we also witnessed fresh buying at a slightly lower level. So in a way a bit of consolidation is always a healthy sign for the market.
Having said that, the next big trigger which the market will be eyeing is definitely going to be the corporate results for the next quarter and also the government policies which may or may not get announced.
Apart from this one thing that has become clear with the recovery of the BFSI sector is that they do deserve a better valuation which is pretty much getting reflected in the stocks of this sector.
Themes like China’s action and inaction which may influence the metals, the FII flows and some specific sectors like textiles or speciality chemicals that may get affected by the government policies are expected to drive the market going forward.
Kotak Mahindra Bank recently announced the lowest ever interest rate on home loans which will be applicable only for a limited time period. Do you expect other banks doing the same given that the festive season will be here soon?
I think in the banking sector we have witnessed a demand for the banks which are growing. Asset quality has been on top of our minds for quite some time and once the asset quality issue has stabilised people have shifted their focus on growth which is why ICICI Bank, to an extent Axis Bank and even SBI have seen good moves. Unfortunately Kotak and HDFC haven’t seen much movement in spite of its excellent asset quality. They haven’t really enjoyed much growth, which they deserve.
I think that is why these banks are trying to bring focus back on growth and the only way for them to grow at this stage is probably to lower the interest rate on housing loans.
Kotak being a very conservative bank wants to play through housing loans which is probably the safest bet. By trying to generate growth through the housing loan segment and by lowering the interest rate they are trying to be aggressive in this sector and there is no harm in doing so.
Overall I think housing finance is an interesting sector and there are lots of housing finance companies which are doing well and will continue to do well.
From a more longer term perspective what would you recommend to traders at the current juncture?
I would suggest a couple of sectors which investors could look at. The first one is the textile sector which I think will benefit from the government policy announced yesterday.
Also some of the companies are getting excellent traction in the international market as China is going out of favour and the procurements are more and more happening from India.
is one company which we believe investors could look at keeping the price target at about Rs 175. Investors can hold the stock for a period of 9 to 12 months.
The other sector which will definitely benefit from the economic recovery is the hotel industry. So investors could look at Chalet Hotels as well as Indian Hotels for a 30% to 40% upside from the current levels.
The last sector which I would like to mention is the construction sector in which cement stocks look very promising.
The post monsoon cement recovery, the housing for all construction boom as well as infrastructure spend by the government should ensure that cement demand remains robust. So
should do well going forward.
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