Why Hemang Jani is betting on Jindal Steel & Power and JSW Steel

Near term, Bharti Airtel might remain a bit subdued but if you look at it from the next one or two years’ perspective, this is going to be one of the best performing stocks in the market, says the Group Senior Vice-President, MOFSL.

Who are these buyers? 7% in Reliance is not like a dinky move. So what exactly happened in Reliance yesterday?
In case of Reliance Industries, the big issue is that a large number of domestic mutual funds and PMS fund managers are underweight on the stock and because of this underweight positions and the fact that more than 50% of the Nifty move is driven by Reliance itself. When the mutual fund manager or a PMS fund manager who is sitting on an X amount of corpus is looking to add his weight, it does not happen overnight. It has to happen over a period of time and this process may go on and that is driving the stock price.

Overall people definitely have very high expectations when it comes to the retail part of the business, though at this point of time it is not very clear exactly in what shape and form the growth is going to come. But the expectations have got big marquee investors into the game and the way the company is positioning itself, the expectations are extremely high. There is going to be a lot of interest coming in from the investors to add positions into Reliance.

Do you think there is an investment opportunity in any of the steel names or would you take them as a temporary trade?
The recent data points in terms of domestic players increasing prices and globally after almost about six to eight quarters, net export from China having actually gone down, there is definitely a bit of a positive sentiment around the steel names. In our case, Jindal Steel and Power is the stock that we have been liking a lot. It has run up quite a lot in the last three to four months. JSW Steel is the other one. These are the two names that we like.

The only thing is that in terms of the upside from current price point it may not be that significant, we really need to see how the incremental data points are, but in terms of quality, Jindal Steel and Power and JSW Steel are the preferred names in the steel space.

What could be the next big trigger for Bharti and would it have to be the AGR judgement?
For the past almost one quarter, though there are a lot of expectations and only two players in the fray, Reliance has been an outperformer whereas Bharti has been a laggard. The way I look at this is that a) There were expectations that the Bharti like Jio will also be able to get some marquee investors into the company, but it has not come through so far and that definitely has been a bit of a disappointment for them. b)After the previous quarter performance where a part of the ARPU increase was built in, we have not seen any meaningful increase in the ARPU as such.

So unless you see a strong visibility of ARPU growth and how they are going to shape up in the next few quarters, people may not get too excited about it. The overall story for Bharti continues to be good because eventually there is addition in 4G customers, the overall opex part is taken care of and you will see decent market share gains coming from Vodafone. Near term, it might remain a bit subdued but if you look at it from the next one or two years’ perspective, this is going to be one of the best performing stocks in the market.

For someone who is looking at the next six months, banks will not make money but for someone who is open to taking 15-20% volatility in three years, banks will make money. Do you agree?
I agree with you. If you see the banking universe in the last about six months or so, more so after March, they have been big laggards They have been underperformers and even the weight of the banking stocks in the Nifty has gone down.

So much of fundraising has been done by banks from Axis, ICICI, HDFC Bank to Kotak and so on. Just two or three months back, Axis did a fund raise, even HDFC did a fund raise and in a matter of one quarter, they are coming back to raise funds when their loan growth is hardly about 6-8% and this is happening at a time when the domestic flows into the market is not that strong.

Somewhere, such a large issue of paper by the banks, which is going to be somewhere close to about Rs 50,000 crore across all the banks put together is not good news for the banking sector because of the liquidity situation.

There is a case for some sort of a range-bound movement or a bit of a correction for some of these names. You might see some buying interest in HDFC Bank because the succession issue is behind us but on an overall basis, this pack is going to be a bit subdued from a near term -- one or two quarter perspective. Beyond that, depending on how the situation evolves, one can take a fresh look at it.