Market is Tanking .... What do the experts say
Cut defensives, add banks;mkt can rise 10% in 1 yr
Jan Dehn Head-Research, Ashmore Investment Management is not perturbed by the intense sell-off in Indian equities. The Indian story is far from over, he tells CNBC-TV18 adding incremental government spending can add 10 percent to indices in one year.
Jan Dehn, Head-Research, Ashmore Investment Management is not perturbed by the intense sell-off in Indian equities. The Indian story is far from over, he tells CNBC-TV18 in an interview adding government spending, particularly in infrastucture, will make Indian equities attractive again. Indices can rise as much as 10 percent in 12 months on policy actions and if GST is implemented one can expect 24 percent return on investments within 2 years, he said. While advising investors to continue accumulating on dips as the market is poised to go up, Dehn revealed he likes cyclicals and financials where he sees a lot of value. "See value in downstream oil companies and industrials as well," he said while warning one to cut exposure to healthcare and defensives. He finds the government support to Gas-fed power stations a big positive for the energy sector.
Right time to create long only portfolio
One should now look at investing into quality stocks from the private banking space that have fallen anywhere between 10-30 percent and whose business models look robust, says Deven Choksey of KR Choksey Shares.
Deven Choksey of KR Choksey Shares strongly believes that the current market fall is purely technical because there is nothing fundamentally wrong. According to him the selling pressure could be because FIIs are reducing their weight in the market and are offloading their longs. They are adjusting their books, he adds. For him this fall provides an excellent opportunity for those who want to create long only portfolio. One should now look at investing into quality stocks from the private banking space that have fallen anywhere between 10-30 percent and whose business models look robust. Auto space also looks attractive post the correction and one can even look at the capital goods space, especially stock like Larsen post its correction.
JP Morgan's 6 sentiment indicators bulls need to be wary of
Indian equities have been an outsized beneficiary of easy global liquidity and soft global growth. Consequently FIIs now own 21% of Indian Equities vs. 14% pre-global financial crisis, cautions JP Morgan
Equity market sentiment indicators are beginning to suggest some caution, says brokerage house JP Morgan. "Our money flow indicator suggests increased interest in export oriented sectors and defensives over the last month. Cyclical sectors and commodities saw outflows," says the JP Morgan note to clients. Other indicators that bulls would be worried about: (Extracts from the note) * Insiders turned net sellers over the month. * Delivery volumes reduced. * EMBI (Emerging Markets Bond Index) spreads widened. * In the Domestic Rates markets, the Yield curve remains inverted, as the short end is pricing in the year-end seasonality,” says the note. On the positive side, India’s vulnerability to Fed tightening has diminished, feels the brokerage. And yet, India remains vulnerable to any upheaval in global markets because of high exposure to Indian equities by FIIs.
(Extract from the note) "Indian equities have been an outsized beneficiary of easy global liquidity and soft global growth. Consequently FIIs now own 21% of Indian Equities vs. 14% pre-global financial crisis. Also, the extent of overweight positions on Indian Equities that Emerging Market investors are currently running is at an all time high – 12% vs. the benchmark weight of 7.7%."
Market nearing end of sell-off now; like pvt banks
According to Sanjay Dutt, the stocks of several companies had become expensive with their prices running way ahead of fundamentals but with expectation of a further correction, market must use that as a buying opportunity now
The Indian market saw immense selling pressure on Thursday with the Nifty closing expiry below 8350-mark and the Sensex shedding 654 points to close at 27458 led by geopolitical tensions. Banking & financials and technology stocks led the massive fall. Speaking to CNBC-TV18, Sanjay Dutt of Quantum Securities said the market is nearing the end of the sell-off now though there will be some more correction but that will not be very deep. The market and the experts were building too many positives into the Budget and the Reserve Bank o India action. According to him, the stocks of several companies had become expensive with their prices running way ahead of fundamentals but with expectation of a further correction, market must use that as a buying opportunity now. Adding to the discussion, Deven Choksey, MD, KR Choksey Securities said the exposure of foreign investors towards India is quite high. He believes players are off-loading long positions in the market ahead of the truncated trading week. He likes private sector banks though he’s expecting muted performance by public sector banks going ahead.
Stay invested in SBI
Hemen Kapadia of KR Choksey Securities told CNBC-TV18, "I would suggest a hold on State Bank of India (SBI) with stoploss of Rs 252 and a target of Rs 283 simply because even if one takes a timewise retracement of the fall, I think once it bottoms out the bout would be either 38.2 or 50 percent retracement of the fall, which is down from Rs 335, so they should be at least some bounce coming in.” “If it takes out Rs 291 then one can have a look at around Rs 305 but after Rs 283, Rs 291 needs to be taken out from a weekly point of view,” he added.
Buy on dips; earnings to stabilise soon
In telecom, Anup Maheshwari of DSP Blackrock Investment Managers says the sector is yet to see pricing power. He is waiting for revenue per minute (RPM) to increase in telecom to justify capex in auctions.
There are too many factors in the short-term to predict the near-term trajectory, is the word coming in from Anup Maheshwari, executive vice-president and head of equities at DSP Blackrock Investment Managers. The first quarter is usually a little soft for the midcaps, but they come back in the subsequent quarters, he says. But earnings overall have been disappointing in the last few quarters, he adds. However, he believes that earnings will normalize soon and it is a buy on dips market. In telecom, he says the sector is yet to see pricing power. He is waiting for revenue per minute (RPM) to increase in telecom to justify capex in auctions. Maheshwari also expects the government to start spending aggressively from next month.
Next 12 months 'very painful'; buy these stocks
Valuations for Indian market have gotten out of hand and the next 12 months could be “very painful” for some parts of it, believes Dimensions Consulting’s Ajay Srivastava. But in an interview, he added that pockets of opportunities exist.
Valuations for Indian market have gotten out of hand and the next 12 months could be “very painful” for some parts of it, believes Dimensions Consulting’s Ajay Srivastava. In an interview with CNBC-TV18’s Latha Venkatesh and Sonia Shenoy, Srivastava said that economy looked “fundamentally positive” in the wake of reforms undertaken by the government, but the steps will take time to percolate down to earnings. “Some correction has already happened. More has to happen,” he said. “The investor should reallocate his portfolio away from stocks that have made him profits. Also, don’t make large commitments [to stocks].” But still, the analyst said pockets of opportunities existed within select stocks and sectors. He picked out telecom stocks as one that are poised to double in the next two-three years. “After the spectrum auction, their cost of material has become fixed. They will have assured revenue. They can’t be many new players in the market,” he said, adding that the shift in dynamics will cause valuations for these stocks to go from the 2 to 4 times price-to-book they are currently at, to 7 to 10 times. Metals, minerals and large industrial companies were also stocks he picked out to gain from the increased economic activity that will take place from the coal auctions as well as the broad pick-up in activity. “The stocks are cheap and under-owned. Pricing has reached extraction cost levels. It's a bottom or thereabouts for these,” he said.
This correction not even close to what is expected
The disconnect between corporate India and stock market is more evident now which is why this correction will get ferocious in days to come, says Nilesh Shetty, Associate Equity Fund Manager at Quantum AMC.
Nilesh Shetty, Associate Equity Fund Manager at Quantum AMC says the market will correct a lot more from the current levels as the reality at the ground level — absence of capex, demand and good earnings — has begun to unfold. The disconnect between corporate India and stock market is more evident now which is why Quantum prefers to stay in cash for a fairly long time. "It is one of the highest you have seen in the history of the fund and we continue to wait," he said.
Our sense it is not even close to a decent correction which we expect. The correction has been primarily the levels that the market sort of rallied to in anticipation of a transformational Budget. But once that Budget never materialised we had given up those gains and we are back to sort of January 2015 levels. Again if you sort of go to corporate India and talk to them at the ground level, things remain very weak. Demand remains weak, no fresh capex is coming through and the balance sheet of corporate remain fairly weak. So our sense for a long time has been that there has been a substantial disconnect between what is happening with the stock market and what is happening at Corporate India. At some point the realisation has to feed itself into the stock prices so cash levels for us remain fairly elevated for a longtime. It is one of the highest you have seen in the history of the fund and we continue to wait. Our sense is at least if the prices do not correct we could have time corrections on our hands and at least this year could be sub par returns for the market.
Happy Investing
Source : Moneycontrol.com
Cut defensives, add banks;mkt can rise 10% in 1 yr
Jan Dehn Head-Research, Ashmore Investment Management is not perturbed by the intense sell-off in Indian equities. The Indian story is far from over, he tells CNBC-TV18 adding incremental government spending can add 10 percent to indices in one year.
Jan Dehn, Head-Research, Ashmore Investment Management is not perturbed by the intense sell-off in Indian equities. The Indian story is far from over, he tells CNBC-TV18 in an interview adding government spending, particularly in infrastucture, will make Indian equities attractive again. Indices can rise as much as 10 percent in 12 months on policy actions and if GST is implemented one can expect 24 percent return on investments within 2 years, he said. While advising investors to continue accumulating on dips as the market is poised to go up, Dehn revealed he likes cyclicals and financials where he sees a lot of value. "See value in downstream oil companies and industrials as well," he said while warning one to cut exposure to healthcare and defensives. He finds the government support to Gas-fed power stations a big positive for the energy sector.
Right time to create long only portfolio
One should now look at investing into quality stocks from the private banking space that have fallen anywhere between 10-30 percent and whose business models look robust, says Deven Choksey of KR Choksey Shares.
Deven Choksey of KR Choksey Shares strongly believes that the current market fall is purely technical because there is nothing fundamentally wrong. According to him the selling pressure could be because FIIs are reducing their weight in the market and are offloading their longs. They are adjusting their books, he adds. For him this fall provides an excellent opportunity for those who want to create long only portfolio. One should now look at investing into quality stocks from the private banking space that have fallen anywhere between 10-30 percent and whose business models look robust. Auto space also looks attractive post the correction and one can even look at the capital goods space, especially stock like Larsen post its correction.
JP Morgan's 6 sentiment indicators bulls need to be wary of
Indian equities have been an outsized beneficiary of easy global liquidity and soft global growth. Consequently FIIs now own 21% of Indian Equities vs. 14% pre-global financial crisis, cautions JP Morgan
Equity market sentiment indicators are beginning to suggest some caution, says brokerage house JP Morgan. "Our money flow indicator suggests increased interest in export oriented sectors and defensives over the last month. Cyclical sectors and commodities saw outflows," says the JP Morgan note to clients. Other indicators that bulls would be worried about: (Extracts from the note) * Insiders turned net sellers over the month. * Delivery volumes reduced. * EMBI (Emerging Markets Bond Index) spreads widened. * In the Domestic Rates markets, the Yield curve remains inverted, as the short end is pricing in the year-end seasonality,” says the note. On the positive side, India’s vulnerability to Fed tightening has diminished, feels the brokerage. And yet, India remains vulnerable to any upheaval in global markets because of high exposure to Indian equities by FIIs.
(Extract from the note) "Indian equities have been an outsized beneficiary of easy global liquidity and soft global growth. Consequently FIIs now own 21% of Indian Equities vs. 14% pre-global financial crisis. Also, the extent of overweight positions on Indian Equities that Emerging Market investors are currently running is at an all time high – 12% vs. the benchmark weight of 7.7%."
Market nearing end of sell-off now; like pvt banks
According to Sanjay Dutt, the stocks of several companies had become expensive with their prices running way ahead of fundamentals but with expectation of a further correction, market must use that as a buying opportunity now
The Indian market saw immense selling pressure on Thursday with the Nifty closing expiry below 8350-mark and the Sensex shedding 654 points to close at 27458 led by geopolitical tensions. Banking & financials and technology stocks led the massive fall. Speaking to CNBC-TV18, Sanjay Dutt of Quantum Securities said the market is nearing the end of the sell-off now though there will be some more correction but that will not be very deep. The market and the experts were building too many positives into the Budget and the Reserve Bank o India action. According to him, the stocks of several companies had become expensive with their prices running way ahead of fundamentals but with expectation of a further correction, market must use that as a buying opportunity now. Adding to the discussion, Deven Choksey, MD, KR Choksey Securities said the exposure of foreign investors towards India is quite high. He believes players are off-loading long positions in the market ahead of the truncated trading week. He likes private sector banks though he’s expecting muted performance by public sector banks going ahead.
Stay invested in SBI
Hemen Kapadia of KR Choksey Securities told CNBC-TV18, "I would suggest a hold on State Bank of India (SBI) with stoploss of Rs 252 and a target of Rs 283 simply because even if one takes a timewise retracement of the fall, I think once it bottoms out the bout would be either 38.2 or 50 percent retracement of the fall, which is down from Rs 335, so they should be at least some bounce coming in.” “If it takes out Rs 291 then one can have a look at around Rs 305 but after Rs 283, Rs 291 needs to be taken out from a weekly point of view,” he added.
Buy on dips; earnings to stabilise soon
In telecom, Anup Maheshwari of DSP Blackrock Investment Managers says the sector is yet to see pricing power. He is waiting for revenue per minute (RPM) to increase in telecom to justify capex in auctions.
There are too many factors in the short-term to predict the near-term trajectory, is the word coming in from Anup Maheshwari, executive vice-president and head of equities at DSP Blackrock Investment Managers. The first quarter is usually a little soft for the midcaps, but they come back in the subsequent quarters, he says. But earnings overall have been disappointing in the last few quarters, he adds. However, he believes that earnings will normalize soon and it is a buy on dips market. In telecom, he says the sector is yet to see pricing power. He is waiting for revenue per minute (RPM) to increase in telecom to justify capex in auctions. Maheshwari also expects the government to start spending aggressively from next month.
Next 12 months 'very painful'; buy these stocks
Valuations for Indian market have gotten out of hand and the next 12 months could be “very painful” for some parts of it, believes Dimensions Consulting’s Ajay Srivastava. But in an interview, he added that pockets of opportunities exist.
Valuations for Indian market have gotten out of hand and the next 12 months could be “very painful” for some parts of it, believes Dimensions Consulting’s Ajay Srivastava. In an interview with CNBC-TV18’s Latha Venkatesh and Sonia Shenoy, Srivastava said that economy looked “fundamentally positive” in the wake of reforms undertaken by the government, but the steps will take time to percolate down to earnings. “Some correction has already happened. More has to happen,” he said. “The investor should reallocate his portfolio away from stocks that have made him profits. Also, don’t make large commitments [to stocks].” But still, the analyst said pockets of opportunities existed within select stocks and sectors. He picked out telecom stocks as one that are poised to double in the next two-three years. “After the spectrum auction, their cost of material has become fixed. They will have assured revenue. They can’t be many new players in the market,” he said, adding that the shift in dynamics will cause valuations for these stocks to go from the 2 to 4 times price-to-book they are currently at, to 7 to 10 times. Metals, minerals and large industrial companies were also stocks he picked out to gain from the increased economic activity that will take place from the coal auctions as well as the broad pick-up in activity. “The stocks are cheap and under-owned. Pricing has reached extraction cost levels. It's a bottom or thereabouts for these,” he said.
This correction not even close to what is expected
The disconnect between corporate India and stock market is more evident now which is why this correction will get ferocious in days to come, says Nilesh Shetty, Associate Equity Fund Manager at Quantum AMC.
Nilesh Shetty, Associate Equity Fund Manager at Quantum AMC says the market will correct a lot more from the current levels as the reality at the ground level — absence of capex, demand and good earnings — has begun to unfold. The disconnect between corporate India and stock market is more evident now which is why Quantum prefers to stay in cash for a fairly long time. "It is one of the highest you have seen in the history of the fund and we continue to wait," he said.
Our sense it is not even close to a decent correction which we expect. The correction has been primarily the levels that the market sort of rallied to in anticipation of a transformational Budget. But once that Budget never materialised we had given up those gains and we are back to sort of January 2015 levels. Again if you sort of go to corporate India and talk to them at the ground level, things remain very weak. Demand remains weak, no fresh capex is coming through and the balance sheet of corporate remain fairly weak. So our sense for a long time has been that there has been a substantial disconnect between what is happening with the stock market and what is happening at Corporate India. At some point the realisation has to feed itself into the stock prices so cash levels for us remain fairly elevated for a longtime. It is one of the highest you have seen in the history of the fund and we continue to wait. Our sense is at least if the prices do not correct we could have time corrections on our hands and at least this year could be sub par returns for the market.
Happy Investing
Source : Moneycontrol.com
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