Avoid big bets now; budget & monsoon key triggers: Ajay Bagga
Long time
market watcher Ajay Bagga advises investors against taking any big calls at
this point in time. He expects Budget and monsoon to play a major role over the
next few months. "India remains an attractive destination for
international investors," he told CNBC-TV18. Bagga expects money flow into
India to rise irrespective of poll outcome. He prefers private banks over PSU
banks. He is also positive on consumer discretionary and capital goods spaces.
He says investor can bet on midcap space if bullish on Indian economy.
Below is
the interview of Ajay Bagga with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: What is your view on the immediate run up? Also, will you advise
investors to dip their toes in?
Ajay: It’s a very tough call to make and only on
the May 16 will we now as to who is right and who isn’t. So, it is better to
stay on the sidelines. As we are witnessing in the market itself, after a
five-day fall, it was only yesterday that it picked up. But then again, in the
last hour, we saw some selling coming in. So, I would say that the people are
lightening their positions and waiting on the sidelines. Taking a big call
right now isn’t worth it. Of course, given a long-term perspective, being, as
you have already mentioned—a six-month or a six-year period, one should
definitely buy. But you can also wait out and see what happens on May 16, by
when you will get some clarity and then the next event will directly be the
July budget. So, with the new government, you might see some announcements and
some market euphoria coming in. But the main crux would be the new budget and
the monsoon season. Monsoon has considerable impact since agriculture
constitutes 13-14 percent of the GDP and 49 percent of the population is
dependent on it. And if you see the derived consumption coming out of
agriculture, then the impact of monsoon-- mainly the southwest monsoon, which
causes three-fourths of the annual rainfall, is huge and is not looking too
good, as per early predictions.
Sonia: So
far the market has discarded all the global fears with respect to Ukraine, do
you think that it will come back to bite the market post the election results
or do you think that Ukraine is not a big issue?
Ajay: It is
very difficult to comment on the issue of Ukraine. Though the Europeans who are
nearer to the troubled spot seem to be calmer than the Americans, the issue
could easily escalate, at a quick pace. So, I would consider that as one way of
looking at it. It is probably being portrayed bigger than it actually is, since
had it been otherwise, the Germans would have been more bothered than the
Americans are. So more than Ukraine, I think, overall, on a one year basis, the
rise in interest rates in the US -- the taper comes off by October, the Fed,
the bond buying programme-- which goes off at current rates and then, once the
rates start going up, what happens to the global liquidity will be something to
look at. Peripheral Europe is recovering very fast. Once it has recovered, more
investments will go into peripheral Europe and Eastern Europe than in emerging
Asia. These will then turn into bigger factors but even then, India stays as a
very attractive destination. We have been under-owned and even in valuation
terms, we have seen the FIIs increasing their holdings in India while promoters
and domestic investors have been on the sidelines or exiting. So, I would
expect more money to come in; irrespective of what happens on May 16 on a one
year basis.
Latha: For a stock-picker, is it a good
time to get into public sector undertaking (PSU) banks; which is the big
cyclical play everyone is talking about at present?
Ajay: Yes, I
think that the smart money is talking about it. They have been hammered quite a
bit. One word of caution from my side would be that-- given the basel
guidelines, you will have equity dilution throughout. So, if you are talking of
something like Rs 500,000 crore of capitalization for tier-I and tier-II, you
will keep getting diluted if you are at half time the book or one time the
book, unlike the private sector banks where you are getting valuation premium
and have a much higher beta with a growing economy. Therefore, valuation wise
PSU banks have a lot of overhang of non-performing assets (NPAs) and equity
dilution. I would say that a closer bet would be private sector banks since you
will probably make more money on them.
Read more at: http://www.moneycontrol.com/news/market-outlook/avoid-big-bets-now-budgetmonsoon-key-triggers-bagga_1079947.html?utm_source=ref_article
Read more at: http://www.moneycontrol.com/news/market-outlook/avoid-big-bets-now-budgetmonsoon-key-triggers-bagga_1079947.html?utm_source=ref_article
hhLong time market
watcher Ajay Bagga advises investors against taking any big calls at
this point in time. He expects Budget and monsoon to play a major role
over the next few months. "India remains an attractive destination for
international investors," he told CNBC-TV18.
Bagga expects money flow into India to rise irrespective of poll
outcome. He prefers private banks over PSU banks. He is also positive on
consumer discretionary and capital goods spaces. He says investor can
bet on midcap space if bullish on Indian economy.
Below is the interview of Ajay Bagga with Latha Venkatesh and Sonia
Shenoy on CNBC-TV18.
Latha: What is your view on the immediate run up? Also, will you advise
investors to dip their toes in?
A: It’s a very tough call to make and only on the May 16 will we now as
to who is right and who isn’t. So, it is better to stay on the
sidelines.
As we are witnessing in the market itself, after a five-day fall, it was
only yesterday that it picked up. But then again, in the last hour, we
saw some selling coming in.
So, I would say that the people are lightening their positions and
waiting on the sidelines. Taking a big call right now isn’t worth it. Of
course, given a long-term perspective, being, as you have already
mentioned—a six-month or a six-year period, one should definitely buy.
But you can also wait out and see what happens on May 16, by when you
will get some clarity and then the next event will directly be the July
budget. So, with the new government, you might see some announcements
and some market euphoria coming in. But the main crux would be the new
budget and the monsoon season.
Monsoon has considerable impact since agriculture constitutes 13-14
percent of the GDP and 49 percent of the population is dependent on it.
And if you see the derived consumption coming out of agriculture, then
the impact of monsoon-- mainly the southwest monsoon, which causes
three-fourths of the annual rainfall, is huge and is not looking too
good, as per early predictions.
Sonia: So far the market has discarded all the global fears with respect
to Ukraine, do you think that it will come back to bite the market post
the election results or do you think that Ukraine is not a big issue?
A: It is very difficult to comment on the issue of Ukraine. Though the
Europeans who are nearer to the troubled spot seem to be calmer than the
Americans, the issue could easily escalate, at a quick pace. So, I
would consider that as one way of looking at it.
It is probably being portrayed bigger than it actually is, since had it
been otherwise, the Germans would have been more bothered than the
Americans are.
So more than Ukraine, I think, overall, on a one year basis, the rise in
interest rates in the US -- the taper comes off by October, the Fed,
the bond buying programme-- which goes off at current rates and then,
once the rates start going up, what happens to the global liquidity will
be something to look at.
Peripheral Europe is recovering very fast. Once it has recovered, more
investments will go into peripheral Europe and Eastern Europe than in
emerging Asia.
These will then turn into bigger factors but even then, India stays as a
very attractive destination. We have been under-owned and even in
valuation terms, we have seen the FIIs increasing their holdings in
India while promoters and domestic investors have been on the sidelines
or exiting. So, I would expect more money to come in; irrespective of
what happens on May 16 on a one year basis.
Latha: For a stock-picker, is it a good time to get into public sector
undertaking (PSU) banks; which is the big cyclical play everyone is
talking about at present?
A: Yes, I think that the smart money is talking about it. They have been
hammered quite a bit.
One word of caution from my side would be that-- given the basel
guidelines, you will have equity dilution throughout. So, if you are
talking of something like Rs 500,000 crore of capitalization for tier-I
and tier-II, you will keep getting diluted if you are at half time the
book or one time the book, unlike the private sector banks where you are
getting valuation premium and have a much higher beta with a growing
economy.
Therefore, valuation wise PSU banks have a lot of overhang of
non-performing assets (NPAs) and equity dilution. I would say that a
closer bet would be private sector banks since you will probably make
more money on them.
Read more at: http://www.moneycontrol.com/news/market-outlook/avoid-big-bets-now-budgetmonsoon-key-triggers-bagga_1079947.html?utm_source=ref_article
Read more at: http://www.moneycontrol.com/news/market-outlook/avoid-big-bets-now-budgetmonsoon-key-triggers-bagga_1079947.html?utm_source=ref_article
Long time market
watcher Ajay Bagga advises investors against taking any big calls at
this point in time. He expects Budget and monsoon to play a major role
over the next few months. "India remains an attractive destination for
international investors," he told CNBC-TV18.
Bagga expects money flow into India to rise irrespective of poll
outcome. He prefers private banks over PSU banks. He is also positive on
consumer discretionary and capital goods spaces. He says investor can
bet on midcap space if bullish on Indian economy.
Below is the interview of Ajay Bagga with Latha Venkatesh and Sonia
Shenoy on CNBC-TV18.
Latha: What is your view on the immediate run up? Also, will you advise
investors to dip their toes in?
A: It’s a very tough call to make and only on the May 16 will we now as
to who is right and who isn’t. So, it is better to stay on the
sidelines.
As we are witnessing in the market itself, after a five-day fall, it was
only yesterday that it picked up. But then again, in the last hour, we
saw some selling coming in.
So, I would say that the people are lightening their positions and
waiting on the sidelines. Taking a big call right now isn’t worth it. Of
course, given a long-term perspective, being, as you have already
mentioned—a six-month or a six-year period, one should definitely buy.
But you can also wait out and see what happens on May 16, by when you
will get some clarity and then the next event will directly be the July
budget. So, with the new government, you might see some announcements
and some market euphoria coming in. But the main crux would be the new
budget and the monsoon season.
Monsoon has considerable impact since agriculture constitutes 13-14
percent of the GDP and 49 percent of the population is dependent on it.
And if you see the derived consumption coming out of agriculture, then
the impact of monsoon-- mainly the southwest monsoon, which causes
three-fourths of the annual rainfall, is huge and is not looking too
good, as per early predictions.
Sonia: So far the market has discarded all the global fears with respect
to Ukraine, do you think that it will come back to bite the market post
the election results or do you think that Ukraine is not a big issue?
A: It is very difficult to comment on the issue of Ukraine. Though the
Europeans who are nearer to the troubled spot seem to be calmer than the
Americans, the issue could easily escalate, at a quick pace. So, I
would consider that as one way of looking at it.
It is probably being portrayed bigger than it actually is, since had it
been otherwise, the Germans would have been more bothered than the
Americans are.
So more than Ukraine, I think, overall, on a one year basis, the rise in
interest rates in the US -- the taper comes off by October, the Fed,
the bond buying programme-- which goes off at current rates and then,
once the rates start going up, what happens to the global liquidity will
be something to look at.
Peripheral Europe is recovering very fast. Once it has recovered, more
investments will go into peripheral Europe and Eastern Europe than in
emerging Asia.
These will then turn into bigger factors but even then, India stays as a
very attractive destination. We have been under-owned and even in
valuation terms, we have seen the FIIs increasing their holdings in
India while promoters and domestic investors have been on the sidelines
or exiting. So, I would expect more money to come in; irrespective of
what happens on May 16 on a one year basis.
Latha: For a stock-picker, is it a good time to get into public sector
undertaking (PSU) banks; which is the big cyclical play everyone is
talking about at present?
A: Yes, I think that the smart money is talking about it. They have been
hammered quite a bit.
One word of caution from my side would be that-- given the basel
guidelines, you will have equity dilution throughout. So, if you are
talking of something like Rs 500,000 crore of capitalization for tier-I
and tier-II, you will keep getting diluted if you are at half time the
book or one time the book, unlike the private sector banks where you are
getting valuation premium and have a much higher beta with a growing
economy.
Therefore, valuation wise PSU banks have a lot of overhang of
non-performing assets (NPAs) and equity dilution. I would say that a
closer bet would be private sector banks since you will probably make
more money on them.
Read more at: http://www.moneycontrol.com/news/market-outlook/avoid-big-bets-now-budgetmonsoon-key-triggers-bagga_1079947.html?utm_source=ref_article
Read more at: http://www.moneycontrol.com/news/market-outlook/avoid-big-bets-now-budgetmonsoon-key-triggers-bagga_1079947.html?utm_source=ref_article
Long time market
watcher Ajay Bagga advises investors against taking any big calls at
this point in time. He expects Budget and monsoon to play a major role
over the next few months. "India remains an attractive destination for
international investors," he told CNBC-TV18.
Bagga expects money flow into India to rise irrespective of poll
outcome. He prefers private banks over PSU banks. He is also positive on
consumer discretionary and capital goods spaces. He says investor can
bet on midcap space if bullish on Indian economy.
Below is the interview of Ajay Bagga with Latha Venkatesh and Sonia
Shenoy on CNBC-TV18.
Latha: What is your view on the immediate run up? Also, will you advise
investors to dip their toes in?
A: It’s a very tough call to make and only on the May 16 will we now as
to who is right and who isn’t. So, it is better to stay on the
sidelines.
As we are witnessing in the market itself, after a five-day fall, it was
only yesterday that it picked up. But then again, in the last hour, we
saw some selling coming in.
So, I would say that the people are lightening their positions and
waiting on the sidelines. Taking a big call right now isn’t worth it. Of
course, given a long-term perspective, being, as you have already
mentioned—a six-month or a six-year period, one should definitely buy.
But you can also wait out and see what happens on May 16, by when you
will get some clarity and then the next event will directly be the July
budget. So, with the new government, you might see some announcements
and some market euphoria coming in. But the main crux would be the new
budget and the monsoon season.
Monsoon has considerable impact since agriculture constitutes 13-14
percent of the GDP and 49 percent of the population is dependent on it.
And if you see the derived consumption coming out of agriculture, then
the impact of monsoon-- mainly the southwest monsoon, which causes
three-fourths of the annual rainfall, is huge and is not looking too
good, as per early predictions.
Sonia: So far the market has discarded all the global fears with respect
to Ukraine, do you think that it will come back to bite the market post
the election results or do you think that Ukraine is not a big issue?
A: It is very difficult to comment on the issue of Ukraine. Though the
Europeans who are nearer to the troubled spot seem to be calmer than the
Americans, the issue could easily escalate, at a quick pace. So, I
would consider that as one way of looking at it.
It is probably being portrayed bigger than it actually is, since had it
been otherwise, the Germans would have been more bothered than the
Americans are.
So more than Ukraine, I think, overall, on a one year basis, the rise in
interest rates in the US -- the taper comes off by October, the Fed,
the bond buying programme-- which goes off at current rates and then,
once the rates start going up, what happens to the global liquidity will
be something to look at.
Peripheral Europe is recovering very fast. Once it has recovered, more
investments will go into peripheral Europe and Eastern Europe than in
emerging Asia.
These will then turn into bigger factors but even then, India stays as a
very attractive destination. We have been under-owned and even in
valuation terms, we have seen the FIIs increasing their holdings in
India while promoters and domestic investors have been on the sidelines
or exiting. So, I would expect more money to come in; irrespective of
what happens on May 16 on a one year basis.
Latha: For a stock-picker, is it a good time to get into public sector
undertaking (PSU) banks; which is the big cyclical play everyone is
talking about at present?
A: Yes, I think that the smart money is talking about it. They have been
hammered quite a bit.
One word of caution from my side would be that-- given the basel
guidelines, you will have equity dilution throughout. So, if you are
talking of something like Rs 500,000 crore of capitalization for tier-I
and tier-II, you will keep getting diluted if you are at half time the
book or one time the book, unlike the private sector banks where you are
getting valuation premium and have a much higher beta with a growing
economy.
Therefore, valuation wise PSU banks have a lot of overhang of
non-performing assets (NPAs) and equity dilution. I would say that a
closer bet would be private sector banks since you will probably make
more money on them.
Read more at: http://www.moneycontrol.com/news/market-outlook/avoid-big-bets-now-budgetmonsoon-key-triggers-bagga_1079947.html?utm_source=ref_article
Read more at: http://www.moneycontrol.com/news/market-outlook/avoid-big-bets-now-budgetmonsoon-key-triggers-bagga_1079947.html?utm_source=ref_article
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