RIL a better contrarian bet than some of the other sectors: Sandip Sabharwal

"There was a time when ICICI Bank had to sell their stake in ICICI Lombard because they needed capital now I think ICICI Bank could be looking at increasing their stake back in ICICI Lombard because they do need capital and they got lot of buffer after credit cycle has turned," says Sandip Sabharwal, asksandipsabharwal.com.

Wanted to get in your take on new age tech companies, what is the outlook here, do you believe that now with the cleanup act in place and financials really playing catch up that it merits a relook?
I have gone through the results of all these companies, the management commentaries etc so I think most of the managements are trying to play the market in terms of saying what the market wants to hear but internally I still believe that many of these companies are not ready for delivering profitable growth especially when the growth overall slows down so I would still wait it out.

I would think that this sporadic up moves which happen post some news flow or management commentary might not be very durable. I am still on the wait and watch mode.

There was a time when ICICI Bank had to sell their stake in ICICI Lombard because they needed capital now I think ICICI Bank could be looking at increasing their stake back in ICICI Lombard because they do need capital and they got lot of buffer after credit cycle has turned. So is not this extraordinary, I mean they have sold stake in ICICI Lombard a couple of years ago because they were desperate for tier-1 capital and now they are going to be buying it back?
It is very rare phenomena that you sell off something and then you get the opportunity to buy it back again so I think that is reflective of the exceptional turnaround which has actually happened in ICICI Bank where today it stands at top of the heap in terms of both performance, quality of the asset group and the kind of excess provisions they carry etc.

And ICICI Lombard obviously trading at lows of, I do not know what the exact price right now is, but I think last I saw it was at a 52 week low or near a multiyear low so it makes sense for them to increase some stake at this price.

Would you buy Reliance now? It cannot happen that markets are nearing an all time high and Reliance is below the 200 DMA, are we missing on something? I think all the businesses are doing well, windfall tax is out, retail is doing okay, Jio is in a fantastic groove?
I would say that for people who are willing to take a contrarian bet and looking to buy into some pharma or some stocks I think Reliance is a better opportunity because Reliance does have triggers going for it in several of its businesses and it has also underperformed significantly. Its valuations have come off hugely over the last two and a half years after it went up excessively.

I would agree that Reliance is a better contrarian bet in the large cap side than some of the other sectors.