Hemang Jani, Senior Vice President at Sharekhan says that post earnings he sees markets moving in a broad range without much upside. He feels appreciation in dollar and softening in the commodity prices may see money coming back into the emerging markets. He also gives stock picks that are value buys at this point.
Excerpts from CNBC-TV18's exclusive interview with Hemang Jani:
Q: Firstly, if you could give us an overview of what you have made of this results season and where you see the most value emerging?
A: I think the market has run-up about 12-15% in the last one month. Some of the concerns that were playing in the market have not completely gone away. If you look at the global markets, the risk of further tightening that people feared or even if you look at the corporate numbers, I think we have had a mixed bag. There is a feeling that the numbers that have yet to come out may not be all that impressive.
The other important point is that this time around the downgrades that we have seen across the corporates is far higher than the upgrades. So, we think that with this kind of a background, the markets are likely to be in a broad range and we don't see much upside from current levels.
Q: The current you think will now kind of peter out, are you seeing significant amount of profit taking coming in?
A: Yes, we do think that around these levels looking at the kind of concerns that we have had, I don't see much of an upside. I think the best-case scenario is that if we have some kind of an appreciation in the dollar and softening in the commodity prices, then you could see money coming back into the emerging markets. So, if you see indications on that front, probably you will see some more upside. But at the current state of things, we think that the upside is going to be very limited.
Q: Where do you see value emerging in the midcap space, would you still recommend buys in that space?
A: Yes, we do think that there are pockets where you see a lot of value in the midcap space. Even in the real estate space, somebody who is concentrating on a market like Mumbai, overall real estate we think that there is going to be a bit of uncertainty about the prices and the growth etc.
But in a place like Mumbai I don't think there is going to be much of price erosion for companies like Orbit Corporation. We also like something like a Unity Infra, which again is a construction play that we think will do well and something like an Ipca Labs, which is a niche player in the pharma space, very reasonably priced. I think one can definitely look at it. Mahindra Lifespaces is another company that we like in the midcap space.
For people who really want to play value, I think Bajaj Holding is a very good stock because they have got Rs 700 cash in the balance sheet. The two companies are going to be coming up for listing in the next 2-3 weeks time.
The company is available at about Rs 750. So, these are some of the stocks in the midcap space that we think are pretty good in terms of value picking.
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