According to CEO of Investshoppe Ashish Kapoor, it would be naïve to think that all the poison has gone out of the system and the correction is over. He says that it will take some more trading sessions for the market to really come out of all the troubles.
He asks people to buy on dips. The long-term fundamentals are still intact, he says, and that is a good opportunity for investors to buy stocks.
Excerpts from CNBC - TV18's exclusive interview with Ashish Kapoor:
We started off on a weak note but recovered in the last leg of trade particularly. Would you attribute it primarily to short covering and would you still be keeping a close watch on the markets?
One would have to be very cautious because buying came towards the end. It was mainly in the index heavy weights. It is too premature to say that the correction is over.
We would have to watch more carefully. It will take some more trading sessions for the market to really come out of all the troubles. This correction will last some more time. The long-term fundamentals are still intact and that is a good opportunity for investors to buy stocks, which have come down. It is good time to do bargain hunting.
What is the call that you are taking on the part of your investors regarding their investment decision at this point of time? Which are the sectors that they need to look at? In today's market we saw cement as a sector play up very strongly and FMCG led that recovery mode. What are you suggesting your clients to do and which are the sectors they must look at?
The best way for investors is to buy on dips and buy on stages. Do not put everything at one go; use every dip to invest a part of your investment surplus because this market will give more opportunities.
Whenever one sees a good dip just buy some percentage of your investment surplus. The sector to watch out is cement, which has seen the worst. A lot of strength is coming back into it. The forecast is very good. Definitely, the big ones like Gujarat Ambuja, Grasim and ACC look quite good even at these levels.
Besides, other sectors to watch out are capital goods and construction. Watch out for stocks like Larsen and Toubro, BHEL, ABB, Siemens, and Thermax. Apart from that sugar stocks have fallen a lot.
There are a lot of picks in sugar, which look quite good especially south based sugar plants like KCP Sugar, Kothari Sugars and Chemicals. We can even buy some stocks in pharma and in FMCG like ITC, Matrix Laboratories, Dishman Pharma, and Ranbaxy Laboratories
Your thoughts on ITC and Dabur
I like Dabur. It has a large percentage of its sales coming from the rural sector. We are all talking about the revival of the rural sector economy. The government is having a lot of focus on that.
One of the counters, which gains from that is Dabur, which has about 50% of the revenues coming from the rural sector. They also have a huge range of products. After Hindustan Lever, it has the second largest range in consumer goods. Though its valuations do look a bit stretched, but it is a buy on dips. Going forward, one can still make good returns from here.
A word on the metals pack and the kind of meltdown that we saw on those counters and, of course, the recovery that came by in the last leg?
Metals is one sector where one should postpone buying for the moment because a lot depends on how and where the LME goes and stabilizes. These are the things, which are not in anybody's control. We will have to just watch for some more time and invest in metals stocks only once the LME stabilizes.
Metals is not the sector to watch out immediately, there are better sectors at present.
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