Kunj Bansal is bullish in 3 sectors over the medium term


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Sona BLW (auto ancillary stock) is a stock that I find attractive. The company has done very well and will continue its good fortune. “I hope its June quarter numbers will also be good,” says he. Kunj Bansal, Founder, Investment-illiteracy.com.

Overall, the market texture has changed and there is a little bit of conviction to say the worst is over. Are we at the 16000 level?

It looks like yes, although it is difficult to predict what the market will do. The trend over the last eight months has been to see the market correct, then rebound. When the market looked like it had reached its peak, then the next correction saw it fall further.

The peak at 18500 in October was surpassed by 15200 in June.

This time, however, the factors have changed and the commodity prices are finally correct. Sharp corrections have been made in steel and aluminium. We also had a correction of almost 17-18% in aluminum. Copper has seen a similar correction of 15-16%.

Oil is also now stable, even though it was higher yesterday.

There are many things that have changed. All this commodity correction seems to have given some breathing room. RBITheir inflation target might not be met.

The government also restructured many duties it had earlier on the metal sector this Week, which has given some breathing room in terms of fiscal deficit numbers. This resulted in 10-year government securities yields falling in the market by nearly 15 bps.

Now, the macro-level breathing space is in, but the micro-level result season is now in.

It is unlikely that quarter one’s result season will be positive. It is well-known in the market, so it is most likely built in when we dropped to 15200 odd Nifty level.

We are near the end of the earnings season, so that is the question we need to be asking, especially in the IT and consumption sectors. The provisional quarterly data has been updated. What do you think? What do you think?
Although it is difficult to call the situation a washout, it isn’t all bad. We have received quarterly updates and a preview from some consumption companies. The results are on the expected lines, with some showing volume degrowth in the single-digit.

Some of them are also turning to growth, but only marginal growth in low- to mid-single digits.

You can move up to the high single digits on the value side because of the price rises. However, inflation was caused by the price increases and subdued sentiment.

This quarter is not expected to be as positive for the consumption industry. This has been built into markets.

The beginning of June saw nearly all FMCG stocks reach their 52 week lows one after another, usually within a span of a week to ten.

This week we have seen a recovery, as well as a good market that has been favorable for consumption.

The first quarter numbers were subdued. However, the hope is that the correction which was more focused on agri commodities will remain and give the FMCG companies some breathing room.

The important thing is whether or not they pass along the corrected raw material prices to the consumers. Even if they don’t pass the correction on directly, they have the knowledge and ability to manage the business. They will therefore introduce some type of scheme, offers, and benefits to try to increase sales.

The monsoon progress is also something that you need to keep an eye on. Although it is currently marginally below normal, it is not too early to declare it so.

If the prices remain normal, then rural sentiment will improve and that will lead to increased demand. The hope is that the correction in agri prices will continue. If that happens, then we will see good numbers for September quarter. This is what the market has started to build in and prices in the consumption sector have begun to rise.

If crude oil is falling, we can connect it to the possibility that global inflation is also coming down. This is a positive sign. India. We will have the CPI data in the next week. What do you expect from that data? And if there is any relief in the numbers, what sectors are you most comfortable linking to the upside?
Oil prices worldwide have started to drop from $120 a peak. They finally reached 100 odd levels last week.

It is vital that oil prices remain low for an oil-dependent economy. The price of a barrel would provide us with comfort around $70-$80. This is a far cry from the current situation, but it will have an impact on inflation in India and globally.

Unfortunately, the rupee has also suffered a sharp decline due to both the dollar index as well as macroeconomic fundamental factors. We have also seen continuous FIIInflows from India. These factors, taken together, will infuse imported inflation.

We import far more than we export so there will be a new wave of inflation. This will be counterbalanced with the fact that metals prices and agri commodities have stabilized.

We will also see the correction in consumer prices, so these variables will have the net-net effect on the CPI numbers released.

The next month’s numbers of CPI inflation might have an impact on the oil prices but of course let us also keep in mind that the oil prices on ground have not corrected in India.

Nifty Realty has seen a steady increase in sales over the past three weeks. We saw great numbers. Any of those ancillary players that you feel like might be the next movers could also be because the cement packs and cement counters were both quite worn down. Are you optimistic that momentum will catch up?
Yes, real estate is a sector that has seen an increase in consumer demand.

Real estate demand was not affected by an increase or decrease in the interest rates on loans mortgages. Therefore, I don’t necessarily have stock picks in that sector.

Sona BLW, an auto ancillary stock, is a stock I like. The company has done well and will continue doing so. We expect the June quarter numbers to be good.

Electric vehicles, which are a rapidly growing market, should account for a large portion of sales. Over the medium-term, stock should be strong.

(Disclaimer) The opinions, recommendations, and views of the experts are theirs. These are not the views of Economic Times)


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