In a chat with ET, Avinnash Gorakssakar of Miintdirect.com has talked about the state of the market and his favourite stocks.
Time to buy quality stocks in a slow manner:
Though the pain has not gone completely, we have been telling our clients to start putting in 25% to 30% of their funds because it is difficult to make a call on where the market would end, whether at 8000 or 7800. Whenever the market corrects sharply, you see selling across the board. We have been telling to take a broad sectoral and stock-specific approach in auto, auto components, pharmaceuticals or for that reason even midcap stocks, where the business model and the cash flows are right because this is good time to play for 2016. The markets may remain volatile in the short term.
Auto stocks like Ashok Leland, Tata Motors DVR and Bharat Forge should be accumulated at every decline:
Within the rate-sensitive segments, we continue to be positive on the commercial vehicle space, both Ashok Leyland and Tata Motors DVR. These are stocks which we would be buying at every level, even on a small decline. The auto component space is also buzzing and my sense is that larger players like Bharat Forge remain a dominant player in Europe and the US. Considering the kind of strong domestic CV recovery, they are large suppliers of automotive excels, which is a key component for most of the CV player.
With more volume growth coming in auto components, Bharat Forge should benefit.
Sintex – very unique play on the clean India initiative plus textiles:
Although it is an F&O stock, so sub-volatility will be there and some stocks like Sintex, which we believe is a very unique play on the clean India initiative plus textiles are doing well. The cash flows are improving for the other parts of the business. So, one has to take a longer-term call, at least for the next 12-15 months. This could be a good time to actually accumulate quantities currently.
Bosch – Avoid in the short-term:
Largely the business for Bosch comes from the commercial vehicle and the tractor space. My sense is that tractor sales have been pretty bad for the last two quarters. They had some problems at one of their facilities where there was some labour unrest. Again, production had to be curtailed. So Bosch is obviously going to be hit by the slower tractor volumes, which have not come in a positive territory yet.
So, for them the other segments like CVs would be more critical. That is probably a reason, and again the point is the stock had outperformed the market earlier quite significantly. Some sort of correction is obviously going to happen considering these factors, but these are also good long-term opportunities. Bosch is an MNC and there are also expectations that once the tractor volumes pick up, you will see a good bounce. But in the short term, some pain would continue.
ICICI Bank – wait and watch:
Post the results, ICICI Bank’s numbers definitely were a shade better than what the street had expected. But on the asset quality side, there were some sort of deterioration compared to the Q3 quarter. Clearly, the bounce has been quite surprising, but my sense is given the kind of volatile and challenging environment, the bank has done pretty well. It would take some more quarters to see whether we could see asset quality getting stabilised.