Continue to be moderately positive on metals: Avinnash Gorakssakar, Miintdirect.com

In an interview with ET Now, Avinnash Gorakssakar, Head of Research, Miintdirect.com, shares his views on some sectors and stocks. Excerpts:


ET Now: We are at 6200 in the session so far. There has been a lot of support coming in from commodities and cyclicals. Hindalco is up in the session. Is this a space that you are focusing on as well in terms of your overall research outlook?

Avinnash Gorakssakar: See, on the commodity side we continue to be moderately positive on metals. Clearly looking at the kind of numbers Tata Steel has thrown, my sense is whatever negativity was there in the metal space probably looks to have ended and probably in the coming quarters one could see some improvement in the margins, especially from the steel space.

Tata Steel has actually shown numbers which were much beyond expectations. So within the metal pack, I would still like to put my bet on Tata Steel. May be for one more quarter there could be some weakness in aluminium, but overall the negativity, which was seen about a couple of quarters before, seems to have ended and probably some amount of moderate buying can be suggested, especially in stocks like Tisco even at the current levels.

ET Now: There is something brewing in some of the offshore companies. I do not know if you have heard anything what all of the stocks are going up in trade today?

Avinnash Gorakssakar: More exploration activity would definitely mean more investment, especially on the oil rig front and more specifically compared to Aban, it gave a good positive surprise as far as the quarter two numbers were concerned. Partly considering the fact that more oil rigs were under operations and the rupee also helped it record good amount of profitability.

So I would presume that if the rupee continues to remain even at the current levels, most of these companies actually have got their orders booked in dollars. So any weakness in the rupee actually means more dollar earnings. That is probably the news flow which is actually positively impacting all these stocks in this sector now.

ET Now: What are you doing with some of the PSUs? SBI post the numbers moves up higher and on the 1811 currently, what would you do with the State Bank of India?

Avinnash Gorakssakar: The numbers were definitely much better than expectations, although the profit drop was definitely bad. In fact, in the coming quarter also one could see some pain on the asset quality side.

My guess is, once the corporate activity from the corporate sector starts, the key to banking growth would be what kind of investment cycle the economy throws up. Clearly the markets are betting on the fact that some sort of improvement could happen, may be in the second half of this financial year and more importantly SBI is more an FII favourite.

Clearly, more FII flows have actually gone into the counter. Within the large caps something like PNB, SBI or maybe UCO Bank from the small PSU banking space are the stocks which my sense would definitely continue to show strong momentum.

ET Now: Out of the consumer names, which are the ones that you are still placing a bet on? I mean we have been talking at length about Jubilant FoodWorks and the rally that we are seeing in that stock, but what are you proposing from the FMCG pack?

Avinnash Gorakssakar: Clearly Jubilant FoodWorks has been a complete surprise. The kind of valuations this stock is throwing and the kind of numbers the company came out in the quarter two, there were increasing concerns that there was a slowdown in the consumption space.

My guess is investors who hold this stock can hold on, but fresh buying definitely does not seem to be advisable. In the FMCG space, Dabur came out with very good numbers. I would be more comfortable betting on Dabur considering that volume growth has been pretty healthy, margins have been very good and going forward the management commentary suggests that possibly margins could possibly improve further. So I would say that in this market in the consumption space Dabur looks a good defensive as well as a good steady bet.