Kunj Bansal of Centrum Wealth Management does not see a major downside for the market. According to him the trend for the market is up even though one could see a small correction in the next 10-15 days.
However, the correction may not be significant enough to offer a significant entry opportunity.
He is upbeat on the PSU banking space and would be a buyer in them. He thinks there is more value in PSU banks than private sector banks. Moreover, the non-performing assets (NPAs) are also likely to improve if the overall economy shows an improvement believes Bansal.
He is also positive on the autos from a medium to long term timeframe. However, in the short-term the higher excise duty and poor December sales could impact them, he says.
He is not so upbeat on the telecom, oil and gas and the real estate space.
Below is the transcript of Kunj Bansal’s interview with Latha Venkatesh & Sonia Shenoy on CNBC-TV18.
Sonia: What is the approach now at the start of the New Year, should retail investors buy at this juncture or should they wait for some further cues on the reform momentum etc?
A: That question has always been difficult to answer and pinpoint the exact timing in the market but given the way the market had moved in the second half of 2014 till November with a marginal correction in December which did not happened in midcap especially in the last two-three days of the calendar year.
One can expect that there could be some correction in the next 10-15 days or so but it will not be a significant correction, so if I were to just try and put some numbers maybe 3-4 percent correction in the largecap indices, marginally higher in the individual stocks. That should be the time to look at getting into the market. I do not think that the market will give a significant downside or significantly lower entry opportunity for any investor to come in.
Latha: Will you be excited enough to buy public sector undertaking (PSU)?
A: Valuation wise that is one space better than private banking. We are talking of a market which has risen 30 percent in the calendar year 2014. Therefore, my view overall continues to remain positive but one also has to look at what can be the themes or stocks or sectors which can give returns from the market in the current circumstances if market continues to go up, which I feel will continue to go up – that is where the valuations will come in.
These valuations especially in case of public sector banks always tend to and should get compared with their performance, with the numbers that the banks have been declaring. Especially, the non-performing asset (NPA) scenarios but keeping the two together public sector banks today are available in the range of – depending on which banks you choose, price to book forward of 0.5 to 1 time, which is significantly attractive compared to private sector banks which are in the range of about two-four times.
Second, the NPA scenario will improve if our overall call is that the economy will start improving. However, also keep in mind the fact that the long pending decision whether right or wrong, only time will tell of bifurcating the position of chairman and MD of public sector banks and finally the call has been taken by the government.
The conclave which is there for two days involves the Prime Minister, finance minister, Reserve Bank of India (RBI) Governor, bank chairmen of both public and private and other dignitaries. So I am sure they have some serious thought behind it and any reforms that come out of it will certainly build up interest.
Latha: So, you are a buyer in PSU bank stocks?
Sonia: What did you make of the auto sales numbers and are there any stocks that you would continue to buy now?
A: Numbers have been mixed or mixed is a softer word; marginally disappointing compared to the expectation that one would have had or had given the way the sentiment has moved positive over the last few months. We indeed saw some pick up around the festival season in December quarter especially in the months of October-November but December numbers have been mixed, in fact they have been marginally lower than expectation and also we have to keep in mind that from January 1 the higher excise duty on automobiles has become applicable.
Would that have further impact on volumes in the month of January and going forward, is something to be watched but as of now the numbers are not encouraging but any correction as a result which comes in these stocks for medium to long-term, the whole sector remains positive particularly the commercial vehicle space is what we like.