Even as defensive stocks like IT and pharma have outperformed since the crash of 2008, thanks to their resilience in a weak economy, a turning around in the investment cycle may warrant a closer look by investors, believes Arindam Ghosh.
Ghosh is the MD and CEO of BlackRidge Capital Advisors, which offers financial services offering advisory, capital markets, alternate investment and wealth management to its institutional, corporate, HNI and family-office clients. He spoke with CNBC-TV18 for its weekend show, Taking Stock.
"In addition to the export-led companies, one should look at adding cyclicals," he said. "Many of the quality, high-beta stocks should be looked at but investors should stick to the frontline cyclical names before sliding down to the lower-quality or midcap names."
Also read: Intermediate trend for Nifty is up; stay put: Sukhani
Anu Jain, director Equities, IIFL Private Wealth Management, and an expert in technical analysis, seconded the view.
Discussing her short-term trading ideas, she said she was positive on stocks such as capital goods stocks such as Crompton Greaves and Voltas , tyre stocks MRF and Apollo and metal stocks Jindal Steel and Hindalco .
"For the week ahead, traders could go long Maruti , which could see a 3-4 percent upside and United Spirits , which could rise to Rs 2,780-Rs 2,820 levels," she said. Amtek India , which has about doubled to Rs 140 in the past one month, can be bought on a dip for a target of Rs 200, she said.
Below is the interview of Arindam Ghosh, MD & CEO of Blackridge Capital Advisors and Anu Jain, Director-Equities of IIFL Private Wealth Management with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Sonia: It has been days of consolidation that this markets have witnessed which is generally the nature of a bull market but going ahead as we head into the elections, would you still maintain your long bias in the market?
A: We would not like to qualify this as a bull market as yet. Clearly, what we have seen so far is that the economy has been running on three legs. One is the distinct improvement that we have seen in the overall macroeconomic fundamentals.
The second is the relative underperformance of the other emerging markets clearly China, Brazil and Russia in particular and more importantly I think it has been election and the possibility of stable government.
So I think market has been moving on a clear uptrend largely on account of these three factors but we need to bear in mind that whilst the risk reward is definitely favourable as of now, we need to be also mindful that expectation built up has been tremendous and that is where I think there is a clear risk, which is getting built in.
That would definitely moderated as we get beyond the elections and into the results and we have a new government settling down, a lot will depend on what kind of economic agenda is going to get pursued and then you will have the dynamics of inflation growth, interest rates all of that playing up. So we would have these intermittent periods of profit booking and consolidation but the overall trend would continue to remain positive.
Latha: What are the Nifty charts telling you, will you be able to draw in the blue skies up until mid-May?
A: The fact of the matter is that the charts are definitely on a much more positive note that you have seen over the last two-three years as long as I can remember. We are sustaining over the 6,350 so your breakout took place between that 6,320 and 6,350.
The fact that you sustained so many sessions over that, you panned up to 6,560, closer to 6,600 and then obviously there is a consolidation, the breakout is intact, you are intact for about 6,700 at a bear minimum going closer to 6,900-7,000, yes you will have consolidation period, it is a very nominal saying that every dip in this market is a buying opportunity, so whether it is for a 50 point or 100 point, I think it is a point to get into the market for people who are underinvested of what they haven't bought as yet. So I would definitely say it is a positive time to enter the market.
Latha: From what you are saying at least 5 percent more is left on the Nifty. What is the Bank Nifty, is it 10 percent more because it has been outperforming?
A: That is the dicey part. We have seen it outperformed over the last one month. It has done fabulously but obviously with results around the corner that is where you can see 5 percent cut or a 5 percent hike.
That is the only dicey place but what is giving Nifty legs is oil and gas and other sectors, which can take it irrespective of whether Bank Nifty makes it or not. So there maybe a clash in the Bank Nifty but the other sectors would definitely make up for it.
