While the market had a stellar run in 2017, returning up to 29 percent, first half of this year has been a rather subdued one. Both Sensex and Nifty have risen just around 3-5 percent in the first half of this calendar year.
Experts such as Gautam Trivedi at Nepean Capital believe that the market could drift until the next elections. Till then, it will be a stock picker’s market this year.
“There are a bunch of issues plaguing the market, foreigners (FIIs) are exiting; SIP (systematic investment plans) trends are strong, but incremental money is not flowing into mutual funds and fixed deposit rates are going up,” Trivedi, Co-Founder & Managing Partner, Nepean Capital told CNBC-TV18 in an interview. FII money needs to make a comeback, he added.
Speaking on the correction in midcap space, he sees the fall as an opportunity to pick value stocks.
Trivedi gave opinions on several stocks and sectors during the course of the interaction. Here are his views on the same.
PSU banks: Trivedi is of the opinion that one could stay away from PSU banks. There is a lot of pain left in the sector. He cited the example of power sector, where NPLs have risen in a company like PFC. “I don’t think that problem has hit the banking sector. As rates go up, this problem is likely to continue,” he added.
Meanwhile, he highlighted the issue of lack of infrastructure to solve cases involved in Insolvency and Bankruptcy Code (IBC). There are only about 40 judges for 5,000-odd cases and that is an issue, he said, adding that infrastructure remains a bottleneck.
Private corporate banks: Trivedi expects investors to stay away from ICICI Bank until the issue surrounding Chanda Kochchar is resolved completely. In case of Axis Bank, at the current valuations, he said, it is pricing in the bad news and waiting for a successor to Shikha Sharma.
Pharma: There are companies where generation shift in management is taking place. He cited examples of Cadila and Lupin where successors have taken over the mantle and would take the companies at next level.
Data-based entertainment: Trivedi believes that while telecom companies have been providers of internet bandwidth and 4G services, investors could play the beneficiaries of such developments such as Saregama or Shemaroo.
Tata Motors: In this case, investors must give a chance for N Chandrasekaran to rebuild the stock. On its fundamentals, he said that passenger vehicles and trucks are gaining traction. In fact, new launches have been well received on passenger vehicles front.
“A real rejig is underway in case of rest of the Tata Motors. They are selling investments in non-core assets and steps such as ESOPs could yield results as well,” he added.
Mahindra & Mahindra: Trivedi said that the stock ticks all the boxes on corporate governance, management bandwidth and a play on rural India. Yet, the stock has not performed to its potential, he said, adding that he is unsure of what else could be a positivetrigger for the stock.
Maruti Suzuki: He attributed the rise in stock to the implementation of seventh pay commission recommendations. Discretionary spending is making a comeback because of this.
Bajaj Finance: Every industry has a leader like this one and the reality is that it will only go from strength to strength, he said.