Where can you add new positions in a booming market? Neeraj Dewan explains

“There is always this fear of more supply coming into the market and we know that LIC will come out with more such issues and there will be more availability of stock in the market,” says Neeraj Dewan, Director, Quantum Securities.

Where do you spot fresh opportunities in the market or perhaps places to add more positions?
Monday was a good day for autos because the numbers which came for July were pretty strong and even commercial vehicles sales have still been doing well. I think autos is one space where there is under ownership, people are not so invested like they would have been looking at the performance which auto has seen.

In autos, auto ancillary is one part where I feel there would still be opportunities because midcap stocks have still not performed to that extent that the largecap stocks have done in this 2,000 point rally which we have seen from the bottom. So auto ancillary would be one space and other space is the commodity consumers. There is infrastructure, capital goods, engineering, construction. This is also one space where I feel there are still opportunities.

The banking BFSI space also has opportunities. We have seen some decent set of numbers from some of these NBFCs and banks and those will also improve as we move towards the second half of the year. So, there are opportunities even in that sector.

Let us revisit some of the stock ideas which you have shared with us of late and you have been very vocal on SRF, HDFC Life and Can Fin Homes. Do you still like all three of them?
Yes I still like Can Fin Homes. SRF, I feel valuation wise, may need to see some more consolidation before it starts moving up again and gives a good return. But Can Fin Homes and even HDFC Limited from these levels should do well because there is definitely good offtake as far as even the housing sector is concerned.

The general view in the market is that LIC is still a work in progress because that is a company which had social importance and was taking care of protecting Indians but now will they create value for shareholders? I think that is where a migration process has come in.
One, of course, they need to change their mindset as now they are a publicly listed company. Second, the situation in most of these government companies is that a follow-up issue can come anytime. There is always this fear of more supply coming into the market and we know that LIC will come out with more such issues and there will be more availability of stock in the market.

Someone who wants to buy big, will get many more opportunities. If you compare even a small stock like Hudco to the similar stocks in the sector, Hudco is always at a 50% discount because there is always a fear that another issue, another FPO can come in. I think that is also a big thing which keeps the stock prices under check as there is a fear of more supply coming into the markets.