A lot of important results are coming. Where will we see market meeting performance and where do you think there is a remote chance of a disappointment or even a surprise for that matter?
We are on a good horse, things seem to be moving on quite nicely and people are happy with India. There are two things that I am a little bit concerned about in the medium term – one is the plus and one is the minus.
and – both with around 11% weight have kept people from owning both those stocks. Now when you add to HDFC Bank, it comes to 17% or 18%. So I actually see people taking money off from HDFC and HDFC Bank and maybe going into the other banks or maybe exiting India altogether.
That is one thing that I am a little concerned about. In the case of Reliance, it is the other way around because they are breaking it up into three. So, 11% will become 4% each and that will bring money into the stock. I think that Reliance will probably pull the Nifty up next week and HDFC and HDFC Bank will probably push it down as the merger numbers come out and the ratios and stuff get decided. That is my thought on a micro level. People like
, which is also going to benefit because they will get the overflow from the HDFC and HDFC Bank merger.
What we are now also starting to see is that the large tier IT companies have come out with their numbers and disappointments. Stocks also fell to 52-week low. The mid-tier companies also have come out. Is the writing on the wall now pretty clear when it comes at least for largecap IT? Is it the time to go for mid tier IT even though they are more expensive?
Well they are going to look at mid tier IT and see whether there is any synergy in terms of the clients. If there is, then there will be some mergers. We have also got two or three American players like Cognizant, Accenture in the fray and they may pick up either parts of businesses or the whole business.
I have been actually looking for consolidation in this industry for a while but it has not actually happened in the way that I thought it would. But the rupee is getting weaker. It is around 80 whereas it was 75 about two months ago.
« Back to recommendation stories
While we wait for Kotak and ICICI on Saturday, the performance that is coming and , and can never be right. How are you positioned on that front when it comes to the mid tier banks?
This provides a different opportunity because in the private equity space, there are about 30 or 40 pretty strong fintech companies and they are ideal candidates to merge into these RBLs or Bandhans simply because they provide the bits that the other does not have.
I actually see that as a trend, particularly as the private equity money dries up. There will be mergers and then as a way of exiting also. There will be a lot of activity in this mid tier banks/fintech space. We have also got powerful players like Bajaj, I do not know they are going to play through this but what they do is also going to make a difference how this space moves. They are a dominant player.
How are you playing the entire real estate theme? Would you like to bet on the likes of , Godrej or is it the home improvement and home building materials that one should have in the portfolio?
I believe in the raw material space and I would say cement, steel, home improvement materials, tiles, plywood – all are related. That is going to drive the market simply because even though some people are moving into new buildings, some people are doing renovations and so it actually captures all if you take all these sectors. So midcap cement is looking attractive, largecap cement is seeing some consolidation and then of course all the peripherals like tiles and taps and sanitaryware and plywood are the ones to jump into. We are seeing nice movement in all of them.