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Book profit in steel stocks to buy aluminium stocks: Hemang Jani
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Last Updated: May 26, 2021, 12:35 PM IST
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Synopsis
One can expect more re-rating in steel stocks on the basis of stronger balance sheets, says Hemang Jani
ETMarkets.com
It would make sense to take out some profits from steel and shift to aluminium where things are looking slightly better and the risk is less, says Hemang Jani, Equity Strategist & Senior Group VP, Motilal Oswal Financial Services. Edited excerpts from an interview:
Do you agree with Credit Suisse s view that it is time to sell steel and go away?
We have seen massive upgrades across steel stocks in the last 2 quarters. The major hypothesis has been that prices are firming up internationally. India is still at a discount and things are looking good. So there are two aspects here. One is that in metals or any other commodity play, the call is on the basis where the prices of those commodities are moving. The second part, which is
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Book out of pockets where the upside has been strong and focus on companies or sectors where the price action has been muted and incremental data points are suggesting revival. We have come up with a new basket to play this unlock theme where we are putting Crompton, ABFRL, Orient Electric, says
Hemang Jani, Equity Strategist & Senior Group VP,
MOFSL
What is your view on Hindustan Zinc and Hindalco?
The entire metal and the commodity pack has seen a very solid move on the back of an underlying price trend for the base commodities and within that, on the non-ferrous side, we like Hindalco. The Novelis part, which is 70% of the EBITDA, is paying out well. For the rest 30%, there can be positive triggers going forward. So, definitely Hindalco and to some extent Nalco are the preferred plays.
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From the perspective of next 1-2 years, Bharti looks good but the short-term perspective remains subdued, says Hemang Jani, Equity Strategist & Senior Group VP, Motilal Oswal Financial Services. Edited excerpts from his interview with ET Now:
The smallcap index is at an all-time high. Out of the 3,000 plus stocks in the segment, over 550 of them are up by more than 4 per cent and 350 are at their 52-week highs. What do you think of this exuberance?
In the last one year or so, midcap and smallcap indices have outperformed Nifty. It will continue for some more time in certain pockets like specialty chemicals, PSUs and pharma because of earnings or overall outlook. We like Laurus Labs and Gujarat Gas. The entire PSU space is doing well.
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Hemang Jani, Equity Strategist & Senior Group VP, Motilal Oswal Financial Services Ltd, says that if steel prices remain at where they are or if there is a marginal increase in prices in India, then the upgrades are going to be massive. Edited excerpts:
A lot of activity is building up in Punjab National Bank counter? What s going on?
We do not prefer PNB and other smaller PSU banks. Among PSU banks, SBI is the best one because of larger balance sheet, better clarity on slippages, etc. And even in terms of valuation, it is fairly priced. You may see big swings depending upon the developments and the way the entire banking sector moves. But from an investment perspective, that comfort is clearly towards SBI.