Sajiv Dhawan of JV Capital Services believes there is no reason to panic, but one must be a little cautious in the markets. He further says that the real trigger for the markets would be the Q2 results. Considering it's only 200-300 points away from the all time high, he says, it can easily get there in one-two days, if the results start to come out on the positive side.
Discussing his strategies for the next few days, he says, one should hold on to the positions and see how the results are. The market trend will be very clear over the next four-five days, he adds.
Excerpts from CNBC-TV18's interview with Sajiv Dhawan:
Any apprehensions on today's give back or do you think it is just a routine global market led softening that is seen?
There's nothing much to worry about. With the opening you would have had a bit of a positive sentiment in the morning and the people would have been obviously hoping, that we stayed above the 3600 levels on the Nifty. But I think it is a part of the course and now with the results coming over the next couple of weeks, obviously investors are going to be looking at that.
The auto sector came out with some very good sales figures for September. I think that is the way the market is going to pan out over the next two weeks, you are obviously going to have pockets in the market, where particular midcaps or select smallcap stocks, would rise due to retail interest.
So I think the real key is going to be the results, as there is no other real trigger. Global cues are obviously going to be important, but everyone is now focused on what is happening domestically.
I don't see any reason to panic and therefore I would still rather be long in the Nifty and some of the other frontline stocks. But stoploss with the Nifty would probably be a bit nearer now, if you are a very short-term trader. Hold on to the positions and see how the results are. I think the market trend will be very clear over the next four-five days.
Would you expect the market to ease of a bit more before the results start pouring in or do you think it's just one off-day and the market will actually add on a bit before earnings pour in?
I would like to see it like this, a band of maybe 20-30 points, no exuberance either way and no panic. I do not see who is going to trigger the selling, as I think a lot of investors are very bullish. The FIIs too seem to be coming back in a big way buying. So I do not see where the selling is going to come from, unless one sees some collapsing global markets to trigger a bit of panic.
On the other hand, retail investors who have invested over the last 10 days are making good profits in smallcaps and are going to remain invested. But I think fresh money from retail investor point of view; will only come after the results.
So I prefer to stay in a band and still playing it on the longside, favouring the bulls at the moment. But I think a little cautiousness is not unwarranted. A lot of investors are very cautious.
But considering it's only 200-300 points away from the all time high, it can easily get there in one-two days, if the results start to come out on the positive side.
Would you buy any protection for yourself if you are trading the Nifty futures long through any puts, etc, or are you bullish enough to hold long futures positions right now?
I really do not see too much hedging at this stage because the markets are going to react one way or the other after the results. Just trade with smaller quantities, maybe 20 per cent-30 per cent or even 40 per cent maximum of what one is normally trading. I think that's probably the safest way to play.
If you take a hedge so early in the month and the market goes against you, you could get stuck. Obviously if you are very cautious, then go ahead and buy some put options in the Nifty. But as of now, I do not see any real point in playing with that particular strategy.
Did you like the auto numbers that you saw today from the two-wheelers and even the four-wheeler companies?
They are very encouraging but the real key is to look at the margins when the results come, and how the margins are going to be impacted by these numbers. But on the face of it, it is very encouraging and you have seen that already stocks like Bajaj Auto are moving up.
So it is very positive for the sector and I think it is one of the sectors where a lot of investors would like to come in. But the real money again would come when the major results are announced.
What are you telling your clients to do with all those construction and engineering stocks now?
I think construction, real estate and these sort of sectors still remain a hold. But it is also difficult sometimes, when we are looking at the valuations. But the story is there, there is a lot of buzz in these sectors and at any significant correction, there seems to be enough buying coming into these kind of stocks.
So while it would be a bit speculative or maybe slightly high-risk, I think it is a sector, which I would still be invested in.
But I think again if you are buying these stocks for a short-term, you will have to be careful whether they are volatile, as they will have dips when the markets react. But if you are holding onto the stock for six months to one year, I think they are okay.
Maybe any sharp correction will be a good option to get in. I think it is a sector, which a lot of investors do like and I don't see that appetite dying down in the near future.
Do you like anything in the power infrastructure space? We have seen some interesting movements in GVK Power, JP Hydro, and Suzlon Energy.
There is obviously some interest in this sector, but if one sees stocks like Suzlon, it had a very good run up. It's one stock, which deceives and surprises a lot of investors. But I really do not know what I would advise on that sort of a stock. If one is a momentum trader, then be long in it. But if one is trying to buy it on fundamentals, obviously one has to take a bit of care.
Some of these other stocks that you mentioned, have been in the limelight from time to time. But JP Hydro is not the one I would really like to follow, as it does not really excite me. So I would much rather be in stocks like Suzlon, which has performed. It is volatile, but at least on the longside, it has given investors good returns over a period of time.
What would you tell your clients on Sesa Goa after its 10 per cent bounce?
Yes, some of the steel companies in the metal pack have had a very good run today (Tuesday), but it is very difficult to pick out a particular reason for this particular stock. I am sure there must be some institutional buying.
This is a stock, which was languishing for some time and was known as 'no man's land', not looking which way to go, but at the current levels, it is not cheap. But there must be some news there, which I am not aware at the moment.
Any thoughts on VisualSoft and its proposed merger with Megasoft?
Obviously the market is expecting it to be fairly well for VisualSoft. When one sees companies like these merging, it's only good for shareholders in the long run. Even for Megasoft shareholders, I think it's a positive thing in the long run.
So it is very positive for the industry and if more mergers and acquisitions like this go through, one is going to see a lot more interest in a lot of midcap stocks, which investors are trying to pick up.
For these two particular stocks, it's bit speculative if one is buying it at the moment. But for longer-term investors, it is obviously very good and any correction would be used as an opportunity probably to get into Megasoft.
Before earnings kick in, what are you telling your clients to be loaded most heavily towards?
I think you have got to be a bit cautious. There is no point in going and buying a Satyam, Infosys or TCS just now. I would much rather buy those CNX IT Index, the bank Nifty and the Nifty itself. I know it is cautious and a dull way to play the markets, but if you have not got your positions in these stocks from the past and are going to buy them in just two-three days, you are going to be playing with fire. You could get away with it, but it could also backfire badly.
So I think if you are very light, buy options, buy the indices where you can. Otherwise just wait and watch because if the results are on the positive side, the 2-3% move on the upside will be followed by further buying as the stocks get re-rated.
This time around there is again a lot of positive anticipation on results and so any slight disappointment could knock the sentiment a bit, considering that we are again nearing those all time highs.
So don't be too aggressive now, I don't see any reason to that now. If the market does start the upward trend, then by all means go with it, but don't become over-leveraged until you see what the results actually are.
What about the banks? Do you think today's flat behaviour is just indicative of a consolidation or do you think they have run their course for the moment?
No, the banks had a very good run up and it's only natural that there is going to be a bit of profit taking. But it's not sold off aggressively at all, which clearly suggests that a lot of investors would likely to hold on to it and a lot of investors who missed out, are trying to come in at slight corrections in the banking stocks.
So it's a sector, which we like and would maintain a hold on. Again there is no reason to go out and buy aggressively just now; but yes, it's a sector I would not be in any hurry to sell off just yet.
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