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Crude the big theme for now, bigger than reforms: Raamdeo

For those looking to benefit from the secular bull market over the next few years, it would pay to sit tight and ignore market fluctuations, Agrawal says.

Crude is the big theme that will drive market trend in the near to medium term, says Raamdeo Agrawal, Joint MD, Motilal Oswal.

In an interview to CNBC-TV18’s Latha Venkatesh and Sonia Shenoy, he says that falling crude is a bigger theme than even the change of government at the centre earlier this year.

“Provided the fall in crude prices is sustainable and not just a one-quarter phenomenon,” Agrawal added as a caveat.

He sees petrochemical companies posting huge losses in the September quarter because of the steep decline in their inventory of crude. However, it will fire up the earnings of many companies whose raw material prices are linked to crude.
 
Agrawal says it will give a big boost to the earnings of consumer companies as it will be upto them to decide how much of the benefits they would like to pass on. Commodity companies will have no such advantage as they will have to pass on the fall in commodity prices.

He says the market could see a correction near term, but it made sense only for traders to book profits now and get in at lower prices. For those looking to benefit from the secular bull market over the next few years, it would pay to sit tight and ignore market fluctuations, Agrawal says.

On identifying multibagger stocks, he says investors should go for companies with a competent management and where not much is known about the business. He quoted a noted management consultant who said that 90 percent of the company was about its management, 9 percent was about the business and 1 percent about everything else.

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