I would be comfortable if we got back to 11,000 and consolidate it rather than just keep going without any pause, Sanjiv Bhasin, Executive VP-Markets & Corporate Affairs, India Infoline, tells ET Now.
Edited excerpts:
One stock that you have been very bullish on is ITC and in the last two months, it has contributed maximum in terms of upside to this market. Do you maintain that bullishness stance or do you feel that ITC has run its course?
ITC is going to be a pedigree stock and right from Rs 260, this has been one of the best performers in the Nifty. The Rs 317-318 may be a temporary hurdle but I have a Rs 350 target for year-end. If I gave you a one-year target, I can stick my neck out and say ITC will be Rs 450. ITC is much more than a brand show, it is all about paper, hotels, FMCG, ITC Haryali, the other businesses are doing extremely well.
Valuations are extremely attractive right now in the consumption basket. ITC was one of my top picks. The other was UltraTech Cement when nobody wanted to talk about cement. I do not rule out UltraTech touching Rs 5000 coming by March 2019.
The third stock is Sun Pharma. Again, for most, it is a very pessimistic call. But see how this sector has performed! I can stick my neck out that pharma will be the dark horse of 2019 rather than IT. If you want to play on any weakness on the rupee, look for a basket of pharma stocks.
How much more upside do you expect in the market this year, over and above the 10% we have already seen thus far?
We have run up quite a bit and we have been almost bang on. The markets have climbed all the walls of worry. You will see some correction may be in the next fortnight where you can see it touch 10,800 to 11,000. But we would not rule out 12,000 around the Diwali time.
As I have been saying, from September onward, midcaps will be the flavour of rest of the year. In largecaps, we think the markets are fully priced. There is hardly any room on the upside and that 100 point which can come may be because of slight bit of froth but that is where you have to be wary. Look for midcaps where you are certain and where earnings have been very positive. Those will be outperformers in the next three months.
You are also highlighting an intermittent dip of 600 points before we make a dash for 12,000. What would lead to that and is it just the peak valuations that the index has been running on?
You will see some proverbial profit booking by mutual funds. You will see some sort of climax globally where markets have again feathering the bend towards equities but a 5% correction from here is definitely much warranted and it is going to take the froth off the market.
I would be comfortable with 11,000 or 10,800 in next two weeks. There can be a lot of reasons for that — profit booking, global cues etc. I am not getting alarmed. All I am saying is that at these levels, if you have been advocating what we have been saying, then it is time to take money home also.
Sometime back, my colleague broke the story about M&M and Ford forming a JV to capture the market share. Ford has a market share of less than 3% or around 3%, M&M has a market share of less than 8%. Do you think two weak players would combine and form a formidable force?
That is the story of Indias consumption and it is the end consumer who is laughing all the way. We have seen that in two-wheelers and now we are going to see that in the SUV market. Their amalgamation will be a very strong point because survival is the key. Both have a good model but again there is too much competition and in the end, people are realising that they have to consolidate and foes may have to become friends.
It will be a saner mover because both of them will cut their extraneous expenses and it will have good repercussions rather than just battling it out on an individual basis. SUVs have been weaklings for Mahindra. For Mahindras, it has all been about tractors. It is not about the SUV market which is fully saturated and margins are going to be under pressure.
You mentioned about power and pharma being the dark horse sectors for 2019. You also gave a host of midcap names to our question that which stocks would do well. You mentioned about the market correcting a bit. Which stocks or which sector according to you would show that correction?
It is evident both the HDFC twins, the largecap retail banks these are looking extremely stretched. Some of the metals are also looking stretched and that is a corollary to a stronger dollar.
So, it is the overall basket, it is not stock specific. I am talking of the index as a whole. If it corrects to 11,000, it will take some froth off the market and that will be healthy for the market.
It is said you cannot run with the hare and hunt with the hounds. You had to be bullish when there is a lot of uncertainty. These days, people are turning a little cautious.
I am not bearish on Indian market. All I am saying is that there is a round of profit booking which I can foresee and I would be comfortable if we got back to 11,000 and consolidate it rather than just keep going without any pause.
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