Introduction To Asset Allocation During And After COVID19

Investing During And After COVID19 All Your Questions Answered

Q.1) What should the level of Nifty be when we start investing?

The index has seen a sharp correction and a recovery thereafter. We think that in the next few weeks the index is expected to move sideways with the zone of 9000-8700 as the immediate support zone. Any major sell-off will be below this zone, while the resistance comes in the range of 9460-9730.

Q.2) After yesterday’s results can you give the short term technical outlook on Cipla?

CIPLA LTP: 567, TARGET: 610-630, SUPPORT: 530-490. It can be bought on declines towards 545-530 for the target of 610-630 while support comes at 490.

Q.3) Can you suggest some sectors or specific stocks to accumulate currently?

Selective Pharma stocks like CIPLA, Alembic Pharma and Neuland Lab can be bought at the current levels.

Q.4) Is it worth investing in Real Estate?

Real estate sector has been hit as any other sector due to the lockdown, but they might have a short-term disruption over the next six to nine months depending on how long the economy takes to revive. Our sector has been under a downturn for almost eight years and once the lockdown is over, once the economy bounces back, revival can be seen. We prefer Godrej Properties in the real estate space.

Q.5) What is the impact of the stimulus package given by the government?

As per our understanding, farmers will be the biggest beneficiaries of this stimulus. Hence, we believe rural theme will be a key thing to watch out and to be in.

Q.6) What about the nifty? At what level should we invest?

As the index has seen sharp corrections and recovery thereafter, we think that in the next few weeks the index is expected to move sideways with the immediate support zone being 9000-8700. Any major selloffs will be below this zone only while the resistance comes in the range of 9460-9730.

Q.7) Banks and financial services sector recovery? When will it recover?

BFSI was trading at premium valuations since the last few years. Due to this lockdown, there has been a sharp de-rating. So overall context from premium valuations, stock prices are factoring in average valuations. It will have trading bounces for the time being and the overall trend will be weak.

Q.8) What about NBFC stocks?

Lots of consolidation will happen in the NBFC space. Strong and big players will become bigger and weak players will have a difficult time because fundraising would be difficult and asset quality will deteriorate.

Q.9) Can you guide any particular stocks wherein we can park our money, such, so that at least our principal stays safe, leave aside the returns, if they do come, to be treated as a bonus. With banks going bust, the idea is to keep the principal intact?

Mario Ltd and Dabur can be good bets for the long term as they derive 35% and 45% of their revenues from rural markets respectively. Increase in demand in rural India can help these companies to generate better revenues.

Q.10) Please share your views on Finance Minister Sitharaman stimulus package given in the last 3 days? According to you is it a real stimulus or Ghoom Phir Dhikhawa ka Stimulus?

A number of 20 lakh Cr is exaggerated. I think they have kept a cushion for further announcements maybe after 1-2 months. The overall market will show negative feedback as of now.

Q.11) Will we get the PPT of this webinar?

We won’t be sharing a presentation separately with the participants.

Q.12) Is it better to buy Swaraj engines Or Mahindra & Mahindra as the holding company? And why?

It’s better to go for Swaraj engine because it’s a pure rural play compared to M&M which has MHCV and SUV along with tractors in their portfolio, we are expecting tractor sale numbers to improve going forward.

Q.13) In the current scenario is this a good opportunity to invest in the Banking and IT sector?

BFSI as a whole is not advisable to buy today. We will advise selective stocks post announcement of quarterly results.

Q.14) The Governments announcements are merely to the supply side of issues however the present issues in hand are more of a demanding challenge. What is your outlook on the same?

Demand will increase as and when the lockdown ends. No other measures will push demand. For example, if tomorrow the GST on new cars is reduced by half, will people start buying cars? The answer is probably no.

Q.15) What can the government do to revive demand?

Gradually lockdown will have to be eased going forward.

Q.16) Give your view on Sterling and Willson Solar can I buy this stock?

We will wait for the quarterly results to be published.

Q.17) What will be the growth rate of IT sectors?

Muted growth in the near term. We believe those companies may desist from providing guidance (already seen several global peers suspending or withdrawing outlook due to significant uncertainty although certain sections expect Infosys, HCL Tech and Wipro to continue providing guidance (akin to what they did during the GFC)

Q.18) Motherson Sumi has large exposure in European markets, will it not be affected since Europe growth is not very encouraging?

With the economic slowdown brought by COVID-19, an already battered auto industry is staring at an elongated recovery cycle owing to subdued demand. Auto ancillary players are equally hit, with operations to remain under pressure in the near-term. While business conditions remain challenging in the near-term for Motherson Sumi, recent corrections in stock price make the current valuation attractive. We recommend buying this stock in a staggered manner.

Q.19) Are the retail loans next in the line for NPAs?

Unsecured loans in retail and credit cards will have high NPAs going forward.

Q.20) Is this right time to enter PMS. And what returns can we expect?

Definitely, you can subscribe to a PMS product as recent falls provide a good opportunity to enter quality stocks at a discounted price.

Q.21) What about real estate? Where do you think real estate is going forward? Do you think people will still invest in real estate? Or will they be more attracted to investments where they can liquidate very easily?

The real estate sector has been hit as all other sectors due to the lockdown, but they might have a short term disruption over the next six to nine months depending on how long the economy takes to revive itself. Our sector has been under a downturn for almost eight years and once the lockdown is over, once the economy bounces back, revival can be seen. We prefer Godrej Properties in the real estate space.

Q.22) In these times shall we invest or trade? If we are getting 15-20 % profit shall we exit or hold?

It’s better to book profits in a timely manner in this uncertain period. Subsequently, you can also construct a long term portfolio as many quality stocks are available at attractive valuations.

Q.23) I want to know that according to your opinion at what price Vedanta may get delisted and what is a fair price of Vedanta for delisting?

If it offers at least 30% premium to CMP, then only it can be successful.

Q.24) What is your view on Cipla?

As a leading player in the domestic market with a strong presence in the respiratory segment. Building US franchise with a focus to launch complex generics for steady growth. While expecting to outperform IPM growth given the renewed focus on India, the recent approval of Albuterol is given the shortage of respiratory products in the US due to COVID-19 would ensure improvement in US growth and margin in the medium term.

Q.25) One point which I want the panellist opinion is which companies may be adversely affected due to this Swadeshi slogan which is being taken very positively by the public?

There is no severe impact due to this.

Q.26) Swapnil please share your views on the auto sector? How much time will it take to revive? Which companies you think will be placed for EVS?

We expect the Indian automobile sector to start seeing a recovery in the fourth quarter of FY21 in a “realistic” scenario, due to delayed launches, higher costs, shortage of labour and material, and productivity losses.

Q.27) What are your views on the Chemical Sector?

Chemical companies can benefit from rising domestic as well as export demand for chemical end-use sectors, India’s attractiveness as a manufacturing destination and its improved ease of doing business. We will remain bullish on the speciality chemicals sector thanks to strong growth visibility.

Q.28) What is your view on Infosys?

Despite the near-term grind on account of the COVID-19 disruption, subsequent improvement in growth trajectory is premised. We have a positive view on the stock.

Q.29) Overall view of Nifty from here?

As the index has seen sharp correction and recovery thereafter we think that for the next few weeks index is expected to move sideways in which the zone of 9000-8700 is the immediate support zone, any major selloff will be below this zone only while the resistance comes in the range of 9460-9730.

Q.30) What is the future of gold prices?

GOLD LTP: 1741, Overall trend remains positive for the targets of 1800-1850$ while support comes at 1695$

Q.31) Who is the contact person for Stoxbox?

You may contact Sumit Kansara on 9769481965.

Q.32) View on Infosys?

Despite the near-term grind on account of COVID-19 disruption, subsequent improvement in growth trajectory is premised. We have a positive view on the stock

Q.33) What about Dabur?

Mario Ltd and Dabur can be good bets for the long term as they derive 35% and 45% of their revenues from rural market respectively. Demand improvement in rural space can help these companies to generate better revenues.

Q.34) Your view on Larsen & Toubro in the long term?

Larsen & Toubro remains the best play on India’s Capex story. We note that without the capex cycle, it may be difficult for economic growth to achieve/ sustain higher levels. However, with delays in the capex cycle, the vendor base including subcontractors are facing serious challenges to survive and L&T may have to support them in the near term. Once the situation improves, we believe L&T would be able to improve its working capital cycle as it has done in the past. We suggest accumulating this stock in a staggered manner.

Q.35) How much NIFTY EPS 1 year forward we should be working with?

477

Q.36) Hind Zink your view pl @194 16.5 div

Not a great investment in the long term.

Q.37) Can u please give your view on the Cement Sector, especially India Cements and Shree Digvijay Cements?

Cement sector can be a good bet because when infrastructure activities resume, they would not see any substantial price drop because of the demand surge. The cement majors would be able to hold on to their prices or in fact, go with price increases. In a situation where most of the cement companies are now enjoying the benefit on the cost side; energy prices, be it coal, diesel, the fuel that gets used for transportation of cement are substantially lower for cement companies. Therefore, I foresee that most of the cement companies would be able to up their margins quite significantly in this situation.

Q.38) Larsen Toubro views?

L&T remains the best play on India’s Capex story. We note that without the capex cycle, it may be difficult for economic growth to achieve/ sustain higher levels. However, with delays in the capex cycle, the vendor base including subcontractors are facing serious challenges to survive and L&T may have to support them in the near term. Once the situation improves, we believe L&T would be able to improve its working capital cycle as it has done in the past. We suggest accumulating this stock in a staggered manner. Both India Cement and Shree Digvijay cement can post decent result going forward.

Q.39) Many analysts recommend HDFC Life Insurance. What are your views on it?

As we expect this pandemic to bring about a change in the Indian mindset and nudge people to pay more attention to protection against unforeseen threats to life. In that case, life insurance companies emerge as big gainers. We prefer all three listed life insurance companies.

Q.40) If we invest in a basket of stocks, do we also get the dividend which the stocks declare?

Yes, you will receive the dividend.