Shankar Sharma can be trusted to say it like it is. He is not afraid. Unlike other analysts who are defensive & apologetic about India’s so-called “governance deficit“, Shankar Sharma is candid and forthright and not only did he come out with all guns blazing in support of Prime Minister Manmohan Singh, but he also attacked foreign investors by saying that if they were getting upset about “governance deficit” then they needed to “get their heads examined“. Shankar Sharma pointed out that there was governance deficit in every country, including the countries the foreign investors were coming from and they were “blowing things out of proportion” and “shooting themselves in the foot“.
Shankar Sharma’s stock picks are listened to very carefully by us even if we may not necessarily agree with his stock recommendations because he does add original perspective to the stock market. In a prophetic declaration, Shankar Sharma said, just before the January 2011 crash of the stock market, that investors must be “conservative” & “scared” of the stock markets. Paying heed to Shankar Sharma’s advice would have kept the investor’s stock portfolio in good shape (see Shankar Sharma’s portfolio picks & investing strategy for 2011).
Even earlier, when Shankar Sharma had recommended some stocks, the investor would have done well to pile on to them because those stocks did give huge returns (see Shankar Sharma’s Stock Portfolio Picks)
So, now when Shankar Sharma says some stocks offer “terrific value“, one has to listen with rapt attention.
Shankar Sharma was asked a very pertinent question by the interviewer as to whether in view of the crash in the stock market, valuations had begun to look attractive and investors ought to start to ‘cherry pick‘ stocks or whether given that the Budget was on its way, investors should wait & watch.
Shankar Sharma said, in a tremendous confidence booster, that while investors should not buy aggressively, they should open their purse strings reasonably and buy stocks of autos, pharmas and public sector banks. Shankar Sharma said that while he liked all 3 sectors, he was partial to autos and pharmas.
As regards PSU banks, Shankar Sharma said they had been “really hammered” and would “bounce back quite smartly“.
He advocated that an investor should invest up to 30% to 40% of his portfolio in auto, pharma & PSU banks.
Shankar Sharma was not content with giving abstract advice but identified the stocks that he felt had the most promise. He recommended investment in Tata Motors which he said “represents terrific value” at Rs. 1200. Bajaj Auto, which has always been his favourite, also found a mention as his stock pick. In the Pharma stocks, Shankar Sharma declared his recommendation to be Ranbaxy, Lupin and Dr. Reddy. While these stocks have fallen 10%-20%, it is not reasonable to expect further correction, he felt.
Shankar Sharma did have a word of caution for investors. He said investors should not “even think” of going and buying the beaten down stocks in the infrastructure space or the oil and gas or the realty space because he said these stocks would continue to languish for a couple of years more (see Infra Stocks: A Time To Buy?)
Shankar Sharma’s stock picks do have a great deal of logic behind them. All the stocks are of fundamentally strong companies with excellent management pedigree, positive cash flows & good business models. It is also correct that these stocks have unjustifiably been hammered in the market even though they continue to deliver strong Quarterly results. Shankar Sharma is obviously a proponent of buying the stocks of blue chips and waiting patiently for the stocks to compound and turn into multi-baggers (see Blue Chips Stock Portfolio: Compounding Multi-bagger).