ET Now In a chat with ET Now, Devang Mehta of Anand Rathi Securities shares his views on the market. Excerpts:
ET Now: What do you make of the consolidative move today on the benchmark indices and an absolute crackdown in high beta counters?
Devang Mehta: A lot of people, in fact, were wondering when would a bit of correction set in. Our answer was, we do not expect a bigger or a steeper correction in such a scenario, where all the data points and macroeconomic indicators seem to be improving, especially when a lot of participation is being witnessed in the markets. This phase of consolidation or a short-term correction of around 1% or 2% could be good for the health of the markets going forward, as it has been largely a seven-eight days’ of straight gains for the market.
As per the high beta stocks, quality will command a lot of premium and in today’s fall, we have seen that stocks with high debt issues as well as companies from the real estate basket are being hammered. As I said, there would still be a lot of quality stocks doing well, even in today’s trade, and we would put our money there rather than in the real estate space.
ET Now: We understand you have a pretty decent-sized HNI desk, but is there some discomfort that perhaps brokers are squaring off client positions?
Devang Mehta: No, I have not heard anything on this front so far. However, one thing is for sure that there would be some amount of panic, because the market was starting to give good valuations to stocks which were probably not doing as well. However, as the theme was suddenly buy into high beta stocks, so the high beta stocks gained favour, but only if they were good quality stocks. For example, if I can classify L&T as a high beta stock, one should buy into L&T at every correction, but not JP Associates or DLF for that matter.
ET Now: Have you taken a look at some of the other names from the metals basket, given that there has been quite a bit of news coming in?
Devang Mehta: This sector can be, in fact, avoided for some time to come, since there are a lot of fundamental factors which would affect them. Clarity would come from the Supreme Court about the coal block allocation, which is again a big hangover for these stocks.
Therefore, one can probably ignore metals at least till the decision comes on mining issues or coal issues. There are a lot of other sectors in the market which are going to do well, like banks and NBFCs.
ET Now: What do you make of the consolidative move today on the benchmark indices and an absolute crackdown in high beta counters?
Devang Mehta: A lot of people, in fact, were wondering when would a bit of correction set in. Our answer was, we do not expect a bigger or a steeper correction in such a scenario, where all the data points and macroeconomic indicators seem to be improving, especially when a lot of participation is being witnessed in the markets. This phase of consolidation or a short-term correction of around 1% or 2% could be good for the health of the markets going forward, as it has been largely a seven-eight days’ of straight gains for the market.
As per the high beta stocks, quality will command a lot of premium and in today’s fall, we have seen that stocks with high debt issues as well as companies from the real estate basket are being hammered. As I said, there would still be a lot of quality stocks doing well, even in today’s trade, and we would put our money there rather than in the real estate space.
ET Now: We understand you have a pretty decent-sized HNI desk, but is there some discomfort that perhaps brokers are squaring off client positions?
Devang Mehta: No, I have not heard anything on this front so far. However, one thing is for sure that there would be some amount of panic, because the market was starting to give good valuations to stocks which were probably not doing as well. However, as the theme was suddenly buy into high beta stocks, so the high beta stocks gained favour, but only if they were good quality stocks. For example, if I can classify L&T as a high beta stock, one should buy into L&T at every correction, but not JP Associates or DLF for that matter.
ET Now: Have you taken a look at some of the other names from the metals basket, given that there has been quite a bit of news coming in?
Devang Mehta: This sector can be, in fact, avoided for some time to come, since there are a lot of fundamental factors which would affect them. Clarity would come from the Supreme Court about the coal block allocation, which is again a big hangover for these stocks.
Therefore, one can probably ignore metals at least till the decision comes on mining issues or coal issues. There are a lot of other sectors in the market which are going to do well, like banks and NBFCs.
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