Covid fear leading to correction in broader market: Sandip Sabharwal

“Covid rumours are creating panic because of two reasons; one people get interested in speculative stocks and then they do not know what to do and secondly a lot of people are sitting on good profits. They have a urge to sell and that is creating some sort of correction in the broader markets,” says Sandip Sabharwal, asksandipsabharwal.com

Call it year-end compulsions, the market falling and getting off the froth a little bit and then this panic around Covid as well is setting us a little bit back?
The last point first. The entire panic is so absurd that I just cannot understand it! So the less discussed the better. Too much discussion is happening about nothing. We will see how it goes. But it has stated some sort of panic and people are panicking because of two reasons; one people get interested in speculative stocks and then they do not know what to do and secondly a lot of people are sitting on good profits.

They have a urge to sell and that is creating some sort of correction more in the broader markets than in the front line indices. It will give opportunity because if markets get sold out without any fundamental reason, then that is always an opportunity and it increases the return potential for next year.

Would you buy this logic that markets may correct for technical factors? They may correct for sentimental factors but if hotel and travel stocks have corrected because of what is happening in China, then is this a good time to buy into some of those hotel stocks?
Yes, I agree because the next three-four years’ story is good for most of these hotel stocks and they have got bought into so much and everyone got into them. On any sign of negativity, they get sold off the most. That is happening now. Overall, as a longer term view, it is good for them to accumulate and keep on accumulating over the next few weeks.

What is your view on Nifty per se? Where do you see Nifty headed for the next couple of days? Are we in for a new high and then sustenance in that new high in the run up to the Budget?
Januaries are really difficult to predict because that is when we have had deep selloffs in the past also. I would not like to guess what is going to happen in the near term, but 2023 overall should be similar to the current year.

The potential of slightly higher returns has inflation peaks out and the actions have become more supportive for growth. So, on improving the earnings growth picture sometimes over the next few months, I would be constructive on 2023 right now, expecting a single digit kind of return. But I am ready to change my view if things stay out well.

What do you think would be the conviction of Chris Wood buying into REC? Is this just a dividend play?
No idea why anyone would buy a stock but I would not really buy it because I do not think there is any great story in REC. If someone needs to buy something in the banking NBFC universe, it is better to buy some high pedigreed NBFCs or large sized banks.