Sanjiv Bhasin, Director, IIFL Securities, says “new highs are here to stay. PNB, Canara Bank, Union Bank and Dhanalakshmi Bank will be the next performers. ICICI numbers are very sweet. If you had missed out on HDFC Bank earlier as it was over owned by FIIs, it is a very, very prudent time to buy it.”

After almost 24 hours after the vote on account, people are getting to terms that yes, it was indeed a decent budget. They were not here to please the masses. It is a fiscally very prudent budget. And probably that is why you are looking at a big bump up as far as the indicative number is concerned of the GIFT-Nifty. New highs are here!
Sanjiv Bhasin: Markets are in fine fettle. The Fed is on easing, bond yields are down to 3.85%. Two days back, I was telling you that and I think the missed out (FOMO) feeling now will come back to the fore because generally people expected that after the Budget, some sort of weakness will creep in. Indian markets are very resilient. You have seen the midcaps outperform, PSUs are leading from the front and banks will now join the rally.

We saw almost Rs 30,000 crore of selling in HDFC Bank, which was the key barometer. And that dragged down the Bank Nifty. It is now starting to catch up. I would expect largecap banks, FMCG, select auto stocks to continue to outperform. So yes, very many new highs are on the card, whether they come today, tomorrow, or the next week. Today I am saying this because there is a lot of pessimism, and some sort of value-buying/short-covering can also trigger a 200-300 point rally on the Nifty.

One quick follow-up on PSU banks. That was the area of the market, BOB, PNB, your old-time favourite SBI was running away because the yields collapsed by almost 10 basis points. Do you see more juice in PSU banks near-term?
Sanjiv Bhasin: Well, new highs are here to stay. PNB, Canara Bank, one of my top picks in my portfolio as a disclosure, Union Bank. Dhanalakshmi Bank will be the next performer. I think ICICI numbers are very, very, sweet. HDFC itself at 2.5 times price to book gives you a lot of thought to ponder that you had missed buying the one of the largest banks in the world, just because FIIs overowned it. I think it is a very, very prudent time to buy it.

Along with that, there is a lot of bonhomie on milk and dairy products. Nestle will be a very big outperformer after the results. There are enough pockets which can take this market higher.

How are you reading into IHCL’s performance and how is that entire cluster of stocks expected to do? Indian Hotels is pretty confident about double digit revenue growth down the line, their new businesses as well driving profitability. Will it remain the leader in the pack?
Sanjiv Bhasin: There is no running away from the fact, but at 500, there is not that much room to get easy money. If you are into Indian Hotels, stay put; fresh buys at this level at the stock trading at quite high multiples will not be easy. And maybe the best money has been made. Yes, we are aware that average room rates are now hitting all time highs and there is still room to go up which tells you that the Indian spender and the middle class income is now migrating towards more aspirations of five star hotels and so on. So continue to be upbeat. This is in our portfolio. We are not adding, but we do not want to leave our position in this stock. An advice to new investors: Do your scouting, do your diligence but now the easy money will not be so easy because good news is already getting priced in.

L&T came out with a decent set of numbers but the stock had run up but they were guided by margin expansion and very strong order inflow for Q4, as clearly as they could get in their con call. Are you comfortable getting into L&T at these levels?
Sanjiv Bhasin: Well we own L&T from much lower levels and we thought that the recent run up was more in excess and it is plateauing. If you recall, whenever L&T comes out with results, the best is priced in before that and after results there is generally a reaction. I would definitely buy it. It is the best player as far as hydrocarbons, electrical and engineering are concerned and it is coming out with a 12-13% margin which was never there. It was always in high single digits.

Their order book, their pedigree of management, their execution and now more fire in the belly of execution will add to that kitty. Their Middle East businesses are also doing extremely well. I would say this is the perfect time to do a SIP, use this volatility maybe for the next 4 weeks to add this stock.

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