Bhasin also says: “Bosch and Balkrishna Industries are two stocks which we own in our portfolio and we may see another 30% upside over the next one year.”
Asia is looking slightly soft today and it is Friday. We have been all so busy making money on the long side ans there has been almost a thousand point rally from Thursday afternoon last week. Yesterday, Bank Nifty paused. Do you think that for whatever trigger, risk weightage, etc, if we pause and digest gains around these levels, that is okay for a day or two?
Firstly, look at the rally. In the last two days, we had almost a 400-point rally. There will be a pause at 19,900, but the left-out feeling and the FII flows will drive this market higher. Let us not wait for too much of a correction or consolidation. We have consolidated on the index enough for two months. Yes, the RBI move will have little moves for a day or so, but that is all in the price.
Look at how credit is expanding. Overnight, the US numbers on GAAP stock is up 12%. So, there is a lot of pent-up demand on the sidelines and the worst-performing people’s perception was IT and IT stocks are back with a bang. There are enough conduits to take the index higher, particularly the windfall tax fall will mean good for Reliance and OMCs.
Sum of parts, I am looking at 20,000 coming, whether it comes next week, today or by the end of the month it is very much on the cards that new highs are here. The index has consolidated enough and maybe for a day or so, consolidation may continue. But we are going to outperform in the near future.
You think that banks and financials could be a spoiler and today if the likes of Bajaj Finance or SBI Card or Paytm does open with a cut of anywhere between 5% to 10%, should one look at buying that dip?
5-10% is very easy off the cuff. I am not looking at such drastic falls. A little bit change in the CET will mean higher cost of borrowing but these people have highest NIMs in the industry. So, maybe a day or so of consolidation but I would look to buy some of the select stocks.
On the other hand, the housing finance companies, since they have 100% collateral, are looking very good and so some of those players could catch on. You must realise HDFC Bank and HDFC now as a merger will have half of the mortgage companies with them, I mean half their business is mortgage. So, Reliance and HDFC Bank are poised to drive this market higher. Crude being where it is, you can add a lot of the tyre, paint stocks, so there are enough legs to put the market higher. Bank Nifty may take a day or so of consolidation. But all dips will be bought. Where the bond yields are and where inflation is heading, both India and the US are telling us that lending season is going to be very robust and the liability side franchise is doing extremely well. So, a day or so of consolidation is no harm, select stocks can be a proxy to the news and so on which is credit cards and so on but there are enough other players who can make up for it.
Let us talk about the other space which is buzzing a lot – auto. Early data suggests that this festive season, the offtake has been good. Some Nomura reports suggest that in the second half of the year, it is likely to go up. Look at how TVS came back to Rs 1,700 now. Hero Moto is at almost a record high. These are the lagging two-wheeler stocks. Eicher was up 5%. Which ones would be your pure play in two-wheelers?
So, firstly, this has been the best performing sector and it was in the dire straits about a year back. Hero was always down. Look at the numbers. In the 17 days of festivals, they have sold a record number of motorcycles. I used to tell you that out of every four EV charging, three are Hero Moto. I still think Bajaj Auto, Hero, Eicher basket is doing well. But please do not miss the woods for the trees. Some of the OEMs are doing even better. Balkrishna Industries, my top pick at Rs 1800, 1900 is hitting new highs and Bosch is at Rs 12,500, 13,000. I kept saying you cannot have a better player and now it is in all parts of OEM which goes into anything to do with auto. Bosch hit a new high yesterday and I would suggest that there is enough room on that basket. So, pick up a good mutual fund but my dark horse play over there is Ashok Leyland on the commercial vehicle, Maruti on the four-wheeler and Bajaj Auto on the two-wheeler side.
Bosch and Balkrishna Industries are two stocks which we own in our portfolio and we may see another 30% upside over the next one year.