Bullish on MCX, Texmaco Rail, KKR Constructions and BEL: Parag Thakkar

In a chat with ET Now, Parag Thakkar of HDFC Securities shares his top picks.

ET Now: What is your top midcap bet? Have you come out with some report on midcaps?

Parag Thakkar: We came out with a report recommending MCX as a strong buy. MCX is a non-linear business; in case the commodity volumes pick up, then there is a huge operating leverage in the system. But a lot hinges on reduction in commodity tansaction tax ( CTT).

It is little bit priced into the stock.

ET Now: The management has told ET Now that the removal of CTT may not happen. If it does not happen, then will the stock correct?

Parag Thakkar: Indeed. This is because some part of the price is factoring in a reduction in CTT. But, it remains a good company, a good business. It enjoys 86 per cent of the market share in India.

If everything picks up, hedging would pick momentum. It is a huge operating leverage business. Apart from that, something which I would like to be keenly so apart from private sector banks and some of the NBFCs.

I would like to recommend something like Cholamandalam where they land at fixed rates. As the interest rates go down, they will benefit. The company would also be a beneficiary of a commercial vehicle (CV) cycle. I would also recommend construction stocks like KNR Constructions, Texmaco Rail in railway and Bharat Electronics in defence sectors.

These companies can become big in size over next 5 to 10 years. Of course, at which point one should buy their stocks and what kind of optimism is built in, is a tactical call. You should buy on dips; that is the strategy.