Early Diwali! These 5 stocks to lead market: Sanjiv Bhasin, IIFL

Pharma, insurance and power could be the dark horses of 2019, Sanjiv Bhasin, Executive VP-Markets & Corporate Affairs, India Infoline, tells ET Now. Sun, ITC, 65571662 65570377 65559807 L&T, Hindalco and UltraTech are the five stocks that will prop up the market.Edited excerpts: We were just talking about the new leadership in the rising market. It has been about ICICI Bank, a comeback by Axis Bank and Reliance also has had a fair share of contribution. Do you think the next 500 points we be led by a new set of leaders or would leadership remain with corporate banks?We are going to have a very early Diwali and Christmas and a Happy New Year, 12000 may be achieved before Diwali! Also 30,000 on the Bank Nifty seems very much seems on the cards. The leadership has clearly changed. You mentioned three stocks but we have been placing our bets on Sun, ITC and L&T. Those are now going to be the next prop up. ITC is leading the FMCG pack. It has gained almost 20% from the Rs 260-265 level where we have been extremely bullish. Sun is again in the eye of the storm as FDA investigations go on in the Halol plant. L&T has come out with a buyback and they are sounding extremely positive on the economy. So, with those three, you can add a Hindalco and UltraTech and you will have the perfect five that will give the leg up to the market. And yes, like you said, Reliance, ICICI are taking it from the front.Which stock to your mind will lead the surge on the Nifty, so far it has been a rotation between Reliance, ICICI Bank and Axis Bank, will this so-called trio of three horsemen will they continue to take the charge forward?Correct. And these have been-- Reliance for five years was in a hiatus and now in one and a half year it has been the best performing stock with a Rs 8 lakh crore market-cap, looking set for a Rs 10 lakh crore market cap next year. If the going is good, follow the strength. And ICICI, Axis have been rerated after the change of guard and looking very good on the corporate side. State Bank of India chairman says most of the NPA resolutions are over, you should see write-backs. So for the first time, corporate India and corporate lending is on the cards. State Bank itself will be a very good contributor. We are also placing bet on three of the underdogs -- Sun, ITC, L&T. Hindalco looks set on the back of the Novelis buyout and that has been playing out brilliantly. We have seen a firming of both alumina and copper prices globally.Do you have a view on Zydus Wellness?No, I do not cover Zydus Wellness but I would say look at Pfizer. That stock has been on a tear and some of the MNC pharma are looking extremely good. Pharma, insurance and power could be the dark horses of 2019 and pharma will be an equal if not an outperformer contributor on the Nifty. You can look at the midcap MNC stocks but I have not covered Zydus Wellness in the near term.Look Out for This Doubler in Next 2 YearAs the market rises, so do these stocks. It is quality that is sitting at record highs. What do you do with the names like RBL Bank?,Do you buy afresh? Do you profit take or continue to hold? A disclosure, we have had a positive coverage on RBL all the way from Rs 450. We think their branch expansion, management were extremely confident and their control of NPAs has been a standout. If I can be contrarian and suggest a name, it would be Capital First and IDFC Bank. They are getting shareholders’ approval by the first week of September and in next two months, the merger will be through. Almost two crore accounts are going from retail and the merger of MSME accounts. The franchise is good, Mr Vaidyanathan will take charge. The IDFC Bank management was clearly pathetic. There will be a new realm and that would lead to spurt in lending in both the MSME and the retail front. I am extremely bullish on this franchise and you could look for a doubler in the next two years.The REC management is clearly of the view that the impact of Allahabad High Court provisioning will not be that large. The market reaction could be negative today but somewhere one should be a buyer in some of these power financing companies. If the industry makes a comeback, banks will be the first one to revive and after banks, the power sector will make a comeback?Correct. As a disclosure, we have been very bullish on PFC, REC. There was a 8.5% dividend yield but we were chasing those around Rs 75 and Rs 100 on REC. In the price to book, dividend payout and the road forward, SBI itself has said that most of the provisioning has taken care of what the fallout would be. And this is not a one-day event. There will be a follow through from RBI, government, power ministry. In Delhi, 7,000 megawatts was consumed on a single day in June, the hottest and the maximum ever and there was not a single day of outage. The government discom is clearly indicating a 6% dividend, the first time in 16 years, given that transmission and distribution losses are at the lowest. If you have a one-year window, you could look for a 50% upside in both these power financers. Most of the woes are over and you will see a positive uptrend in banks and on the power sector.In a market, where breadth is also opening up, consumer stocks are still at the top of the heap. The PE multiples for some of the consumer names are expanding as if there is no tomorrow. Are you telling your clients to book out of consumer names, if yes, which ones?Yes, it is a difficult answer. We have told them to hold on. Some of our plays Nestle, Page Industries, Dabur, Exide have given much more returns than most people could have imagined. And the only way they have made money is by just holding on.Even those three months which were painful all you had to do was to stay invested. It is not easy to time the market. I continue to think you will have less dependence on those stocks. Like you said, the brick and mortar stocks, look at cement, steel, infra and corporate banks. These are the ones with higher delta or higher beta and most of the public want to be in these type of names where there is more volatility. So, expensive will continue to remain expensive. I do not see them getting drastically cheaper but I do expect lot of rotation at least from mutual funds and foreign investors who will try to get into the riskier bets. You could be in for good times given that cement and mortar companies are going to be outperformers and industrial capex is seeming to be very much on the cards. Given that L&T has announced a buyback and continue to say that the next three, four years they could be looking to buyback their stock whenever the stocks seems to be undervalued, the return on equity will improve. It will be more of an institutional play and that would be reflected in the rotation of stocks.

from The Economic Times https://ift.tt/2LyC16L