Ajay Srivastava of Dimensions Consulting, in his interview with ET, emphasized that investors had to be very careful because a number of things could go wrong for the market and send stock prices spiralling downwards. Issues such as the BoP number of minus 20 billion which has been an absolute shocker, the no confidence motion in Parliament, debate at FDI etc could bring in bad news and send the stock markets tumbling.
The best strategy for investors, Ajay Srivastava explained, is for them to identify 10 stocks on which they want to build up a long term position and use every correction to buy those stocks. He said that if investors just forget the market and keep their focus on those 10 stocks, they would do well.
Ajay Srivastava suggested that in building the portfolio of “dream” stocks, investors should not look at volatile stocks. Instead, they should look for A category stocks that are compounding at a rate of 20-25% yearly.
Ajay Srivastava indicated that his fund would steadily building positions in a number of top quality stocks like HDFC Bank, Tata Global, Godrej Consumer & HUL.
Ajay Srivastava made particular mention of ICICI Bank as being one of his favourites and indicated that his fund had already started building up a position in that stock and if there is a correction, he would buy more of ICICI Bank. He explained that ICICI Bank was quoting at reasonable valuations and would be a big gainer as and when any financial sector reform (such as an interest rate cut) happened.
Ajay Srivastava also indicated a preference for Godrej Consumer because it has got a good global as well as India story, strong management and focus on operating matrix.
Ajay Srivastava’s third favourite stock pick was Tata Global Beverages despite the fact that it has already run up 70% in the last three months. Ajay Srivastava clarified that he was not advocating Tata Global Beverages only on the basis of the Starbucks deal or its EPS. He explained that while a retail chain takes time, it was creating a long-term franchise value which was very valuable. He also pointed out that Tata Global Beverages had top quality management led by an MD who was ex-Titan. So, Tata Global Beverages has pedigree of management, pedigree of brand and pedigree of franchise sitting there. It is one of the best stocks to buy just now, he gushed.
Ajay Srivastava indicated that the other stocks that were in his radar and in which he was building positions were OnMobile and SpiceJet
He also advised that while the market was fairly priced and it was difficult to find good bargains, he was hopeful that the few stocks that he selected would give a return of 30%-40% return in the next 6 to 12 months.