4 sectors Anand Tandon is bullish on for near term

"Going forward however, we do expect some of that change as rural India picks up in the current year but the top end will continue to remain fairly robust. So I would imagine that for the near term, at least for maybe another six months or so, the demand for realty should remain fairly strong and that will obviously be reflected in the prices," says Anand Tandon, Independent Analyst.

Cannot help not talk about realty, what fabulous numbers coming in from DLF and the kind of rub off it had on the rest of the realty pack as well. Everything from an Oberoi Realty to Godrej Properties, they were all zooming up yesterday, still a buy?
What we have seen so far is that the top end of the market has not had any major impact. It is the bottom end, which has, reported problems. And we have seen that across the board in, for example, FMCG etc, the numbers have not been really exciting in the year gone by.

Going forward however, we do expect some of that change as rural India picks up in the current year but the top end will continue to remain fairly robust. So I would imagine that for the near term, at least for maybe another six months or so, the demand for realty should remain fairly strong and that will obviously be reflected in the prices.
What we are beginning to see, however, is that the housing starts as it were, the intention to set up a new project has already peaked out in most of the cities and what you are what you're getting now is the pipeline that has been established over the last couple of years.

So, two or three years down the road, you will find that the construction volumes start to fall. And that would actually mean that the demand has to fall off a little before at least that is what the market seems to be signalling. But at least for the next 6 to 12 months, I do not see it.

Which one would you buy; DLF, Sobha, Macrotech or all three?
Among the listed players, the Bangalore companies are the ones that are well represented.

Actually, Hyderabad has been doing reasonably well as well but again the prices have gone up to a level where I would imagine that they will stabilise from here and they need to spend some time in this range before they come down and start again.

And to that extent, Bangalore remains relatively cheaper than most of the other metros, especially the larger ones like Bombay. So all the players that are based out of that should do reasonably well.

I am not sure how invested you are in OMCs or whether do you even believe in investing in this cluster?
The energy space is certainly something that is of interest. The only problem is that because of the government intervention it becomes a little difficult to predict. That said, as you mentioned, HPCL has reported sterling numbers, especially in terms of the marketing margins. It has been way more than expected and overall, therefore, they have reported very good numbers. If they were actually to reach anywhere close to the Rs 12,000 crores, then the stock per say will look reasonably cheap.

So to my mind, gas is the place to be because that is the place where later in the year, as the winter sets in, in most of Europe and North America again, the prices have a potential to spike quite hard because while oil is more directly linked to how far the economy is progressing, gas to some extent also is a matter of the climate.

So, gas prices are the ones that are something that you will need to watch out for and therefore, anybody who is a gas producer like GAIL or even ONGC or any of the other which have some kind of gas availability is something that I would be more bullish on going forward. That said, the near term cycle for refining also looks reasonably good.

What has been your portfolio strategy of late in this market?
Obviously, one way to look at it is that RIL is everything and being an index stock, you need to be in that. The rest of it, HPCL looks to be quite attractive, largely because earlier there was a buzz that BPCL would be divested and therefore, to that extent, the valuation gap between the two could possibly narrow.

Even now, the valuations for HPCL are far cheaper. So that is another stock that you might want to look at. And as I mentioned, GAIL seems to me to be something that can be looked at in the longer term. If you want to be a little more adventurous, then something like a GSPL, which has both Gujarat Gas under it as well as its own industrial business, gives you a mix of both consumer as well as institutional business and therefore it is a fairly hedged portfolio.

When I say what has been your portfolio strategy, I am referring to the aggregate portfolio strategy, not just about energy stocks.
Well, the overall portfolio, if you look at it, clearly for this year while I think the margins for most of the banks have peaked, you will have to look at financials as one of the largest areas that you have to be in because that is where the earnings are going to come from.

You are already getting signs of a significant uptick in terms of auto demand and here I would argue that Bajaj Auto has performed very well in the near term. You might want to look at Hero that has been less of a performer and looks reasonably attractively priced and as I mentioned it is a good play, perhaps even on the rural area besides the fact that they have announced that they will be putting out new models ever so often during the course of this year.
So auto is another place that attracts attention. Capital goods, to my mind, is good because the order books are strong and the earnings will come through. But they are fairly expensive, so I would be market weight on capital goods. If you look at the other parts of the market which have not done so well, for example, IT I think it is looking like it is beginning to bottom out now and while it is early days yet for it to move up, I think you may want to keep an eye on it because as and when the problems in the US banking sector actually were to be resolved, I think that is when you will begin to see an upside coming from there. In the interim, pharma and other defensives like FMCG are places that you might want to hide.