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    My fear is liquidity may dry up in next 12 months globally as well as in India: Rajat Sharma

    Synopsis

    “We raised rates by 50 bps twice or three times as has been the US. Even now they are trying to really fight inflation by raising interest rates. I do not know when this settles as it is just not peaking out in the US. I do not know what happens in India. At some point, you might even see the RBI raising interest far too aggressively than how they have raised so far and that is my fear that liquidity is likely to dry up in the next 12 months globally as well as in India.”

    Rajat Sharma-Sana Sec-1200ETMarkets.com
    “Personally I am negative on Bajaj Finance and I am also fairly cautious about investing in financial services right now because this is one space which will take a major fall in the next correction,” says Rajat Sharma, CEO, Sana Securities

    Is this going to be an important week from an equity market standpoint? For the first time, will inflation be the most watched out number for India and for the US?
    Absolutely and right ,now it is hard to even realise when somebody says that inflation in the US is expected to be 8.1% and the Indian inflation the number is lower than what it is in the US. The last time the US had inflation over 8% was 1981-82. They have raised rates from zero percent to about 3.25% and even India has not raised rates so aggressively.

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    We raised rates by 50 bps twice or three times as has been the US. Even now they are trying to really fight inflation by raising interest rates. I do not know when this settles as it is just not peaking out in the US. I do not know what happens in India. At some point, you might even see the RBI raising interest far too aggressively than how they have raised so far and that is my fear that liquidity is likely to dry up in the next 12 months globally as well as in India.

    What is your opinion on realty? For the Mumbai-based or Maharashtra-based players, there is an anticipation that there could be a stamp duty cut but beside that, does DLF remain a top pick?
    Every other company you look at are heavily burdened with debt. Oberoi Realty is an exception to that. Having said that, I do not follow real estate very closely. I do not have these stocks in my portfolio.

    Do you track Zee? Watever pending government approvals or regulatory challenges were there, looks like are getting sorted. Post Zee-Sony merger, a behemoth will get created with formidable market share and great synergies. But the stock is just not reacting even though CCI approval has come through.
    This is one more space where it is hard to predict which stock will do well. Look at the way NDTV has run up, while still remaining a loss-making company and Zee so far is a very similar kind of story. These stocks move mostly on news of acquisition or a merger and less so by improving margins or profitability. So looking at their books, financials would not really help much. Let us see when the actual acquisition or the merger happens and what kind of value comes out of it. I really doubt if anything will majorly get reflected or impact the financials or balance sheet of even the merged entity. I would actually avoid this stock.

    Do you track the footwear space?
    Yes. I have recommended Campus Activewear in the past. It is a newer listed company and even Liberty. Wherever you see consumer stocks, whether you can give it the flavour of food and beverage or FMCG or even these footwear companies, they will continue to do well in India going forward.

    From time to time, their valuations may run up or they may fall but as a prudent investor, one should have these kinds of consumption stocks in the portfolio, right now more so because these are largely debt-free companies – Liberty as well as Campus Activewear. So whenever inflation does get controlled, if raw material prices come down, their margins are going to expand. If you are building a portfolio, you should definitely look at these stocks, avoid financials, and avoid a lot of stocks which get impacted by interest rates. These stocks are a very good place to put your money in in the kind of market the way we are right now.

    Why not the likes of Bata? Why look at Campus or even Liberty? What stands out is the valuation?
    I think so. Yes, the Bata stock has been very overvalued while its earnings are growing at a very steady pace. Even the way Liberty has run up in the last one month, it would have become expensive; but any time I have looked at the Bata stock, I found it expensive.

    In the NBFC space, Bajaj Finance, Aditya Birla and Piramal all are pretty much cut from the same cloth of corporate governance standards, cost of borrowing and risk management. Yet the performance of Aditya Birla Financials and Piramal and Bajaj Finance are poles apart?
    Yes, that is correct but if you think about it, I have been saying that I am not of the opinion that Bajaj Finance has the greatest corporate governance and that is purely because we saw them converting their loans from the regular core loans that they gave to flexi loans at a time when the government ordered moratorium.

    I am not so sure how in the last two years they have not had any major NPAs come and get impacted. , I think the reason is that whatever could have turned NPA they have turned it into flexi loans. How long can they brush that under the carpet or how long can that not have any impact on the balance sheet of Bajaj Finance remains to be seen.

    Personally I am negative on the stock and I am also fairly cautious about investing in financial services right now because this is one space which will take a major fall in the next correction.

    HAL from 2020 is up Rs 1,700 and that makes it three times from the Covid peak. One will see a similar movement in Mazagon Shipyard. From Rs 150-160, it has become Rs 600? What has changed here?
    If you look at a lot of these companies, their revenue looks really strong because when everything was shut down during Covid, nothing really moved. Most shipping stocks, even government shipping stocks have done well because of the volume growth in their business and this is something I had said and I had recommended these stocks on your show during the peak of Covid sometime last year and my reason was exactly that.

    My reason was as the world starts opening up, a lot of trade will start. A lot of the backlog of trade will start and so shipping companies and logistics and transportation companies will do well because there will be a lot of pent up demand and that is what we are seeing playing out because of the way their margins and profitability have improved.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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