Raamdeo Agrawal, Motilal Oswal - Weekend Reading
Source: CNBC
Aviod PSB stocks, bullish on Dr Reddy
I was not expecting much from RBI policy, but the market movement indicated that there was lot built into the expectations. Our economist also felt that there would be a rate cut by 25 bps and effort by Delhi fuelled rate cut expectations. So clearly there is a disappointment here. But I am not that much disappointed personally.
There is much foreign buying relentlessly till October end but I believe the foreign institutional investors have move off this Christmas holidays. Typically, November-December is a very low activity period unless happening of any extraordinary event in India or other market. We are likely to remain subdued or some there could be some selling in November-December. If FIIs would have behaving normally that this RBI policy will have a much larger impact. I think this is a missing piece. I donâ´ expect much fund buying today, and next 2-3 weeks.
Not a buy call on Public sectors bank at this point in time. In this quarter the results of PSB has been disappointing in terms of asset quality. Even the FM cautioned that in next 2-3 months more casualties may surface. One can expect worst for corporate loan book of public sector banks.
Results of two wheelers were not good. Hero Motors disappointed and Bajaj was the best two wheeler performing company. The two wheeler industry has a long way to go and is one of the globally competitive, very good sectors, despite competition from Honda. Even at current price Mahindra is a strong bet.
The infrastructure and capital goods space L&T has been an outstanding performer not only in terms of margin performance but also the order intake and it is an interesting stock. But I would be very, very careful in that space, because the pain could be very prolonged. So I would stick to quality names like L&T or maybe one or two more names, but one need to be careful for bringing these government facing companies home.
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