Neeraj Dewan on top Diwali trades & best Adani stock to bet on

"Among the Adani Group of stocks, Adani Wilmar should see some more improvement because their top line growth is coming. Margins should also improve because of food inflation which is expected to come down though it is still very sticky," says Neeraj Dewan, Director, Quantum Securities.


What is the trade which could be called a Diwali and a Dusshera trade? Which is that category or business that could surprise us?
Retail play – stocks like Arvind Fashion, Aditya Birla Fashion – are the kind of stocks which should benefit because they were under pressure because cotton prices had gone up. So, raw material prices are up but in the coming festival season, footfalls will increase further into the malls, into the shops. These are the stocks which can outperform. Going ahead, they have not really given very good returns over the last six months to two to three quarters. These are the ones one should look at. Even Siyaram Silk Mills will fall under that category.

What is the best way to bet on if one is excited about buying branded retailers or fashion retailers?
I would go for a stock like Siyaram Silk because of the way the balance sheet have improved over the Covid period. They have used that period to improve their margins, pay off some debts, to cut costs and so some of those are going to stick with them and improve the margins going ahead.

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The top line is increasing and margins have been stable and that will have an immediate effect on their bottom line. That would be my preferred pick, followed by Arvind.

From the Adani Group, which are the top bets?
Among the Adani Group of stocks, Adani Wilmar should see some more improvement because their top line growth is coming. Margins should also improve because of food inflation which is expected to come down though it is still very sticky. So Adani Wilmar is one stock in this category which I like.

India is the fifth largest economy in the world and in terms of market cap, we are amongst the top 10 markets which means what is happening in the world will affect us. As of now, we are outperforming but how long will this continue?
If there is going to be a slowdown in the US, interest rates are going up. Globally things are not looking that great. We cannot really continue like this and that is why we are not building in a rally for the rest of the year, which is that markets at best can consolidate. There can be a small correction also.

But the stocks which are dependent more on exports like IT, pharma, will still stay under pressure along with other sectors which are dependent mostly on exports. But the sectors which are dependent on domestic consumption are growing. Those sectors may continue to outperform. So there is an opportunity if corrections happen because of global reasons.

There has been an opportunity to invest into those stocks because the 15,000-18,000 rally in autos, infrastructure, capital goods or banking was missed by a lot of people. They will get an opportunity to get into these kinds of stocks. Any correction would be good for these stocks.

The domestic consumption is strong and right now, there is no indication of domestic consumption getting hampered because of these global issues. If we get an indication that it is happening and RBI is forced to increase interest rates following the US, then we will get some indication of some slowdown here and one can get cautious; but as far as domestic consumption is concerned, there is no need to get cautious right now. While looking at the global trend, one can expect some correction, I am not looking at any major correction. However, the export- facing sectors will face a challenge.