How are you looking at Sun Pharma earnings?
The numbers are much better than what the market was expecting and it is way above consensus. There will be multiple reasons for this beat but one reason maybe that their speciality products got more than expected traction. I always felt that Sun Pharma was beaten down much more than it deserved as far as the market performance is concerned. A little bit of correction was par for the course. It was clearly in an oversold territory and people were writing off Sun Pharma and that deserved a correction.
What is the outlook on metals?
I have been reasonably positive on metals for some time. There are a few reasons; one is that the Chinese PMI data has been excellent and that indicates significant economic activity in China. There was also a restocking of a lot of metals and that definitely helps the metal prices. As far as the domestic market is concerned, I have been positive on steel companies a) on the back of what is happening in the Chinese market and the global demand and b) also the fact that there are interesting structures implemented by the government which prevents dumping.
Out of the domestic steel manufacturers, I have been bullish on Tata Steel and I believe that at current levels, there is a significant upside potential. One can buy Tata Steel at current levels with a target of about Rs 500 in a year’s time.
How should one be positioned today as US election results come out?
There will be volatility, but assuming we have a clear mandate for the Democrats, the markets will stabilise. The liquidity levels are significant, a fresh fiscal stimulus is awaiting presidential clearance in the US and that will happen irrespective of which party wins after the elections. We strongly believe that a positive bias and positive momentum will continue in markets like India. In spite of the volatility, Indian markets have been performing better on the back of good Q2 numbers as well as macro indicators like the GST collection, vehicle sales etc.
If you are a long-term investor, if there is volatility, there is a bit of a dip at some stage it will be an opportunity for one to accumulate and start building their portfolio. There are still a lot of interesting stocks. Some of the cement companies definitely need a relook at current levels, especially among midcaps. JK Lakshmi Cement, Birla Corp, Heidelberg can be bought and so can some of the interesting IT names like HCL Tech or MPhasis are worth buying at current levels. US election, US politics will settle down but opportunities like this may not come.
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