Expect better opportunity to buy railways, defence stocks a few weeks down the line: Sandip Sabharwal

Sandip Sabharwal, asksandipsabharwal.com, says “there will be better opportunities a few weeks down the line because we have seen some of the railway stocks actually sell off over the last couple of weeks. We will see that happening in defence also as there is too much retail participation in these stocks. That will be the time to buy.”

Is it that phase of the market now where you need to really just take a long break and say I will come back because there is nothing to do? Markets are not that expensive that you want to sell and markets are not that cheap that you want to buy.
Yes, so if you are fully invested, you can still look at possibly getting some cash out of stocks which have very high valuations. Ex of that, I would agree that there is no case for selling out any big time because there will be a correction, but then the correction will not be a 12-15% Nifty correction. It might be just taking out 30% to 50% of the current move which implies a 6% to maybe 8-9% kind of correction.

So, out of that, three odd percent has already happened and that is what we would wait for. The midcap, smallcap indices movement has been much more aggressive, so there is possibility that if there is a sudden drying out of liquidity or outflows, we could see more jerky corrections and I would still think that the midcap side of the market provides us better opportunities than the overall largecap side, so that is where we will have to look out for but I think that should be some weeks off.


Are you still holding on to your position in Titagarh? You bought Titagarh at Rs 140-150 or even lower, I do not remember now?
Yes, we bought at Rs 110, but then it became more than 20% of some portfolios. So we cut down the holding because I do not want to hold so much of a particular stock. Then the portfolio just moved on the movement of that particular stock, so we have cut down the holding, but are still holding on to 50% to 60% of the initial holding.

Any other railway or defence stocks where you had exposure and perhaps have cut back in the last one or two months?
Yes, across the board on the high-flyers, we have cut down and I would think that there will be better opportunities a few weeks down the line because we have seen some of the railway stocks actually sell off over the last couple of weeks. We will see that happening in defence also as there is too much retail participation in these stocks. That will be the time to buy.


I think it is a repetition of what I am saying because I think the entire midcap as a category should have a correction, I do not know whether it will, and everything should correct together.