As regards midcaps, he says the companies with better business models and better performance will be preferred.
Excerpts from CNBC - TV18’s exclusive interview with Deven Choksey:
Q: What do you think of regular profit booking or do you think leg of rally is coming to an end?
A: As of now, it is more of profit booking. I would call the rally coming to an end only when it breaks 10510 on the Sensex. Probably, that would be the first level to be watch out and then after, it will be 10440. Till that time, 100-150 point shave off from the high level is not something, one should be really worried about.
We have all been aware about it that the market is largely range bound market. At this point of time, the market is trying to stabilize.
Q: How have things shaped up in the futures market today?
A: Largely, the roll over has been quite okay. Nifty roll over also has been quite good. Fortunately, at this point of time, no major position has been built up in the market. As a result, going forward, in the next month there is some amount of hope that some amount of build up will take place and the market would gain momentum. I am positive about it.
Q: What do you think of Maruti and State Bank of India ?
A: I am very happy on Maruti, particularly when the sales grew by 20%. The raw materials cost has not gone up. The raw material cost has actually gone up only by 15%. This is where I see an interesting thing, which has happened in the first quarter. In the subsequent quarter, there maybe some amount of pressure on margin for which the company has got some amount of cushion built.
The second thing that one has to believe is that they may increase the vehicle prices in the subsequent quarters. Introduction of new vehicles would take care of some amount of pressure on the margins in the subsequent quarter. All in all, Maruti is quite impressive.
SBI is a little disappointing. But it has more to do with mark to market.
Q: How did you read ONGC’s numbers?
A: I think the numbers are more or less in line with expectations. The surprise part was the declaration of bonus. I think that echoed the kind of confidence that the management wanted to give to the investors. By and large, the company is doing well. Given those negatives, I think this performance is definitely laudable.
Q: What about Arvind Mills?
A: I think the denim prices have bottomed out. They are likely to grow in subsequent quarters. In a quarter or two, volume will pick up. At the same time, prices are improving for denim. The company has got badly impacted because of these two reasons.
In my view, the company is also moving into the strategy, where they are going to have higher conversion of fabrics from the denim and apparels from denim. As of now, there is nothing great to talk about. The results are definitely disappointing.
Q: Have these midcaps and large midcaps seen the worst? Will they also settle into a range like what is happening on Nifty and Sensex?
A: In the midcaps, where the companies are having better business models and better performance will be preferred. I can sense that the worst situation is over for these stocks.
Q: What about Mphasis BFL ?
A: For this stock to move up, we have to see the leaders moving up first. There is nothing wrong with the company per se. Yet, I would like to say that Infosys, Wipro and TCS can lead the pack and subsequently other companies will follow. As of now, more of my attention will be on the big cap stocks.
Q: What have you recommended from the midcap cement?
A: By and large, there is nothing to complain about. They have been quite good. Madras cement numbers are quite good. It has shown remarkable performance both in capacity utilization as well as on the realization. Their numbers are quite impressive and interesting.
Most of these companies have started making some kind of expansion. Probably, we will see some better numbers in the subsequent quarters with the price somewhat firming up for most of these cement companies.
Q: What have you liked in FMCG that you have seen so far between Dabur, Tata Tea, ITC?
A: We have liked ITC. We are convinced about the business model of ITC. We have liked their approach. Their numbers are coming out now. We are seeing gradual reduction into their cigarette dependency. They are getting into other businesses. We probably want to see the agri segment contributing better than what it is doing right now.
This is one company, which has a very robust model and which is quite insulated comparatively to others as far as the business is concerned.
Q: How is August shaping as a month up for you? We are done with the July series, earnings season is over, and the big trigger for August could only be the Fed meeting. How are you telling your traders to be positioned for the month of August?
A: The Fed meeting would be one, which we would be looking for. I am not very sure as to how I will trade. But at this point of time I would watch the Sensex at 11000. Only when it crosses 11000 with significant amount of conviction, then only we will see some major jump coming in. Else, the range bound movement will continue between 9900-11000.
Q: Is retail participation coming back?
A: Selectively yes. People have been asking about the quality companies, where in the valuations are attractive. People are interested in taking a position in the portfolio, staying invested for a longer period of time. Maybe this is the time when we also go out and convince people that these are some of the opportunities
Source From: http://news.moneycontrol.com/