Use dips to buy IREDA and do a SIP for next 6 months: Sanjiv Bhasin

Sanjiv Bhasin, Director, IIFL Securities, says “India is under-owned at the lowest in 16 years by FIIs and that is what is going to drive the prices higher. So I am very optimistic. The broader market will continue to outperform. New highs are very much on the cards. There is the state exit poll and the Monday outlook but all that will be taken with a pinch of salt because the general elections are far away. So there will be volatility.”

20100 here. Not just 20,000. What is next in store and more importantly, what are the stocks you think are going to lead the market rally forward from here?
Everyone is just startled at how fast the recovery happened but it was there. It was for the asking. Lower yields, lower weakness in the US dollar, strength in the US markets, all that meant that the pessimism at the end of October was more technical in nature. The results have been fairly fine. India is under-owned at the lowest in 16 years by FIIs and that is what is going to drive the prices higher. So I am very optimistic.

The broader market will continue to outperform. New highs are very much on the cards. There is the state exit poll and the Monday outlook but all that will be taken with a pinch of salt because the general elections are far away. So there will be volatility, but I am of the opinion that earnings, macros, and the Fed attitude now are not higher for longer but maybe a rate cut coming in the first quarter could set the cat among the pigeons. I am very optimistic, particularly on banks which have underperformed and select stocks which can be outperformers in the PSU and in the consumption basket.


IREDA had a stellar listing yesterday. What is the outlook now hold, book profits or do you think even buying more now?
Well, hold 100%. Book profit depending on your duration because they are talking of 30% CAGR and we know that that space in renewables and green energy, cost of money is the lowest. So they will do very well as a company. It has now got a Navratna status and so on. And PSU power lenders are the flavour of the day, month, and the year. I am very optimistic. We picked it up yesterday for some clients who could not get that much in the initial allotment and we are not in a hurry to sell. We will play off this over the next two years. Like I said, the initial pop and the returns have been startling. I would still say, use any dips to buy IREDA.


But the problem is that dip would not come and many have been left just rubbing their hands because they never got a subscription. What do you think is a good value to buy in case you have already missed out on the IPO opportunity?
That will always be a glass half full, half empty. Do I get in? Do I not? What I would suggest is do a SIP for the next six months. Buy some now, buy some on declines and keep buying every month. It depends on your duration as an investor. What is your horizon? The short-term traders will have made a killing. But the longer-term play is still to be invested in power lenders because they have never had it so good.

Who thought REC, PFC will be four times from the last two years? It is all about holding quality stocks where the underlying fundamentals are changing very rapidly. I still think PSUs are in a sweet spot. So use any opportunity to buy some and then wait for declines or do a SIP for the next three, four, five months. You will get volatility where there will be providential correction and that would be a good point to add on.

What is the outlook when it comes to the auto sector now on the back of the upcoming November auto sales numbers? Do you think that the festive cheer will play out? What is the outlook in terms of the demand momentum across the board?
It is evident in the stock prices if you saw Bajaj Auto, Hero and Eicher all hitting all-time highs and here it is a classic reversal in the last six months where rural income was supposed to be down and out. Two-wheelers were bearing the brunt but two wheelers have made such a smart comeback and not to forget the CV players like Tata Motors.

Also on the back of the Tata Tech listing, Ashok Leyland, Maruti all of them are doing extremely well. I think the season is such when you have 32 lakh weddings and Rs 4.5 lakh crore as expenditure, then cars, autos and two-wheelers, depending on one's budget will definitely find its way into each household. I still think there is more upside. It is the first time that I have seen the pessimism which rubbed out on Eicher was actually a buying opportunity when Hero launched Harley Davidson and Bajaj Triumph.

But Eicher has made a very strong comeback and there is no running away from the fact that Royal Enfield as a brand is really matured and is there to stay. I would definitely put my money on Eicher. The upside is now about 20% from here and one can add a Hero which we own as a disclosure. Both these stocks are in our portfolio but we would advocate buying. Ashok Leyland is my dark horse play in the CV sector. It has rallied from Rs 165-170 to 180. That stock is headed to Rs 225.

What is your take on Zee, given that there has been a lot of flip-flop and rumours that the Zee management is alleging that Sony is going to call off the merger, which they have absolutely refuted? What do you make of the timeline and the way the merger has progressed and what does this imply for shareholders of Zee Entertainment?
Well, frustrating to say the least. The merger will create great synergies, there is no question the presence of Sony will be a blockbuster event and sooner rather than later. Now, with less than 3% stake, the Goenkas have been holding this company to ransom. The faster we get a resolution and create wealth for shareholders, will be the real unbundling. We are extremely positive on the long term, but one has to go through the frustrating time of waiting for the final decision and the legal procedures which are almost over and are just waiting for final approvals.

Are largecap stocks looking cheap, especially private banks? Are they getting ready to cut loose?
Agreed. In the last two years, mutual funds have also underperformed in delivery of returns because midcaps have stolen the show and that continues. PSUs are a large constituents of all the midcap indices. And all from defence to railways to power, they have been the real jet setters. L&T has been the biggest star and along with it, there is a whole basket of stocks which have got rerated from the likes of Dr Reddy, Cipla, Sun Pharma, these are the ones which have actually made big moves and rightly so.

But Bank Nifty is overdone on pessimism. Yesterday, we just saw a trailer of what the under ownership in banks is. And as you know, FIIs’ largest ownership is in banks and IT. And now I think they are making a comeback. So I am in the camp that Bank Nifty goes to a new high and it will be led by largecaps. The sheer weight of HDFC and Reliance is going to move the index. And like you rightly pointed out, the index also has lagged because of these two stocks’ underperformance. I am in the camp that banks make a strong comeback. The likes of ICICI, Axis, which I have been saying for the last week, 10 days, look extremely good on the charts. And HDFC will join the party along with Kotak.