Sandip Sabharwal’s USP is that he is clear headed and firm in his thinking. In his latest newsletter “the bull to the fore“, Sandip Sabharwal says that it is his strong belief that we are in a new bull market now which will play out over the next few years and that the peak to this could be an index level between 45,000-55,000.
We are presently at the first phase of the bull market he says. This phase will get over soon because the savvy investors will rush in to grab the stocks. The second phase is when the rest of the hordes, who are feeling left out, make a desperate grab for the stocks.
Sandip Sabharwal expands on this theme in his interview to CNBC-TV18. He makes it clear that his favourite sector is banks due to the impending rate cut by the RBI. Within banks, PSU banks are the best bet owing to their relatively low valuations in comparison to their private sector counterparts.
Now, if you are inclined to buy banking stocks, one good option is to buy the PSU behemoth State Bank of India (SBI). It is quoting at a reasonable valuation of less than 2 times book and also offers a decent dividend yield of 1.5%. If you mix this up with ICICI Bank, you will have the public and private sector powerhouses in your portfolio.
If you don’t want to be bothered with individual stock selection, then a good option is the Goldman Sachs Banking Index Exchange Traded Scheme where you get a nice mix of the private and public sector banks. In the past one year, this ETF has given a return of 58% and so that gives you some idea of its potency.
If you want to stick to the PSU banks, a good option is the Kotak PSU Bank ETF where you get a package of the large cap and mid-cap PSU banks. This ETF has given a return of 41% YOY.
Sandip Sabharwal has indicated that in his portfolio he has taken an overweight position in financials like IDFC, Mahindra & Mahindra Financial, HDFC Bank, ICICI
Bank and Bank of Baroda.
Sandip Sabharwal’s also made his preference for auto stocks clear on the same logic that the benign interest rate regime would auger well for these stocks as well. Here again, it is best to stick to the top quality names like Bajaj Auto, Tata Motors and Mahindra & Mahindra. The last two stocks are also a part of Sandip Sabharwal’s portfolio.
Sandip Sabharwal was not enthused by FMCG stocks simply because their high valuations mean that there isn’t much left on the table for us to feast on.
So, there you have it. Sandip Sabharwal’s logic is simple & easy to understand but nevertheless very effective. You better act on it now if you want to be early in the bull run queue before the hordes come rushing in.