AK Prabhakar, Senior Vice President (Equity Research), Anand Rathi shares his outlook with Puneet Wadhwa on the markets and the stocks he is bullish on.


The Nifty managed to regain the 5,000-mark in trade on Thursday. Why this sudden enthusiasm in the markets? Can we sustain at these levels?

The rally towards the 5,000 mark is a bear phase rally, which is generally faster. Also in the month of January, the fund allocations are high and foreign institutional investors (FIIs) have also pumped in $1bn in just these 14 sessions of the New Year.

It is further supported by better data from US and China and successful bond auctions in Euro zone which has supported the sentiments. These levels are expected to sustain till derivative expiry but it may become difficult to sustain towards the Budget sessions.

How has the results season panned out thus far? Were the results of IT majors and auto companies (two-wheelers) in-line with your expectations?

The result season has not been surprising on a positive side. IT majors have been disappointing with no positive guidance for the future quarters to come. Top-line has been on positive side mainly on rupee weakness but margin pressure has been felt and bleak outlook is adding to the their woes.

As regards auto companies, Bajaj Auto has shown strong operating performance and profits were in-line with expectations. For Hero MotoCorp, higher depreciation mainly on royalty front and rupee depreciation has shown subdued results. 

Were you surprised by RIL’s buyback plans? What is your view on the stock from a near-to-medium term perspective?

Yes we were surprised by the buyback plans as it was announced after long span of time since 2005. The company has its own concerns, KG-D6 production ramp up issues and also huge cash on balance sheet which needs to be deployed. A buyback price of less than Rs 850 will disappoint the Street.  

The BSE Realty index touched a two-month high on Thursday. Is the optimism overdone? Would you suggest buying stocks from this space at the current levels?
 
We have been positive on Realty stocks and we continue to maintain this stance. Stocks like HDIL, Indiabulls Real Estate, Sobha Developers, Prestige, Mahindra Lifespace and Oberoi Realty look good in this space. Any dip should be seen as an opportunity to buy.
   
What is your take on the cement stocks? Reports suggest that cement prices are likely to remain firm in the medium term.

Cement prices are expected to remain firm led by controlled supply and a pick-up in demand by end - Jan. For large caps like ACC and Ambuja, the positives seems to be priced in with limited upside in near-term. Therefore we like to stick to stocks like Madras Cement, India cement and Ultratech.

Metal stocks have seen a sharp up move since the past few sessions. What is your take on this space?

Any good rally on metal stocks should be taken as an exit opportunity. They are very high beta stocks. Also the global situation is very unclear and the recovery also looks very bleak therefore this may impact the metal stocks performance as well.