3 industries where Kunj Bansal is bullish in the medium term
Overall, since the structure of the market has changed and there is little certainty in the market that the worst is behind us. Did we create a floor around that 16000 mark?
It seems yes although it is always difficult to predict the market. In fact, if we look at the last 8 months, the trend is every time the market corrects and then it recovers and when it looks like the market has bottomed then on the next correction it continues. dropped even lower.
So we went straight from the peak of 18500 odd in October to 15200 in mid-June.
But this time factors were different and in the end commodity prices adjusted. We had a strong correction for steel, we had a strong correction almost 17-18% correction in aluminum, we had a similar correction of 15-16% in copper, that is a good thing.
Oil has finally corrected although yesterday it rallied again.
So a lot of things opened up. First of all, this commodity adjustment seems to have created a breathing space for RBI that their inflation target may not be breached in the end.
Also, the government has restructured many previous mandates for the metals sector this week, so this has also created some breathing space in terms of fiscal deficit numbers, leading to safe yields. 10-year government security in the market fell by nearly 15 bps.
So at the macro level breathing space has come but now to the micro level begins with the resulting season.
The results of the Q1 season are likely not good. Good thing it’s known in the market so to that extent it can be built when we drop to 15200 odd Nifty level.
We’re at the peak of earnings season so that’s still an important question to ask, especially when it comes to sectors like IT and consumer. We have received initial updates to our provisional quarterly data. What do you think about it? Is this one of those quarters to watch out for in terms of consumption and FMCG names that Pho has been counting on?
Yes, we could call it a wash but the situation is not that bad. We’ve had quarterly updates or previews of results coming in from quite a few consuming companies and that’s to be expected with some of them showing single-digit volume growth. .
In addition, some of them are moving towards growth but only marginal growth in the low to mid-single digits.
In terms of value, of course, you will move to the high numbers because the price hike has passed but the price increase has clearly caused inflation and along with the weak sentiment leads to demand that is not there.
So it can be predicted that this quarter will not be good for the consumer sector. Of course it was built on the market.
In early June, most FMCG stocks hit 52-week lows in a one-week to 10-day period.
We have seen a recovery this week along with a good consumer market.
So the first quarter’s slight decline numbers will build into the future but it is hoped that this correction that has come in more specifically for agricultural commodities will remain and thus yield a modest return. number of breathing space for FMCG companies.
What matters is whether they pass the material price adjustment to the consumer. Even if they don’t directly teach them how to do business so they will introduce some kind of plan, incentives, benefits like that that will try to boost sales.
Also, the progress of the monsoon will be something to watch out for as it is currently at a slightly lower than normal level but it is still too early to call it that.
If that remains normal, we will have improved rural sentiment and that will also lead to demand back in place. So the hope is that if this correction in agricultural prices continues we will have some good numbers for the September quarter and that is what the market seems to have started to form and as a result regional prices. consumption began to increase.
When crude oil falls, we relate it to the fact that inflation could also fall globally and that is a positive point for India. But next week we will have CPI data. What are your expectations in that respect and if there is some support on the numbers that you feel could link very well in terms of growth?
Global oil prices have started to decline from a peak of $120. Finally this week, they corrected to 100 odd levels.
For an economy dependent on oil imports, it is very important that oil prices fall. Our comfort will be around $70-$80 for a barrel, which is where we are still very far away but having it will still have an impact on inflation globally as well as in India.
The other unfortunate part is that the rupee has weakened sharply both due to the dollar index and due to macroeconomic fundamentals. In addition, we have seen continuously FII flow from India. So all these factors combined will now cause import inflation.
Our imports are more than our exports, which in turn will likely lead to a new wave of inflation, which will counterbalance the fact that metals and agricultural prices have adjusted.
So we will see that the correction is being transmitted in terms of consumer prices, so these will be the variables that will be the net effect of the CPI numbers to be released.
Next month’s CPI inflation numbers may have an impact on oil prices but of course we should also keep in mind that oil prices above ground have yet to correct in India.
Nifty Realty is inching up and doing pretty well from the past three weeks. We’ve seen great numbers. Any ancillary games that you feel like can be the next impetus because those cement bags and cement counters have been pretty much smashed as well. Do you feel that momentum may soon catch on here?
That’s right, so the real estate sector is one where improved consumer demand continues to take place.
Demand for real estate remained unchanged although rising interest rates led to an increase in mortgage lending rates. So I don’t necessarily pick stocks in that sector.
An auxiliary auto stock called Sona BLW is a stock that looks good to me. The company is doing very well and will continue to do well. Hopefully its June quarter numbers will also come in well.
A large portion of revenue comes from electric vehicles, a growing sector. The stock will do well in the medium term.
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