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“If one is a long-term investor, this is also a domestic-focused, our own domestic-focused consumption story and there is definitely scope there to build on to a portfolio if you are seeing some correction and consolidation started to happen, then one can be looking at real estate also,” says Neeraj Dewan, Market Expert.
What is your take? Are you watching this space very closely because Chris Wood is of the opinion that the real estate cycle is not over as yet. He is still bullish on it, though the market commentary or the sentiment is pretty negative on the real estate space. What is your view on the real estate space?
Neeraj Dewan: What we have seen here is that stock markets, real estate, they all move in tandem. So, we have seen a good correction in the markets. So, a lot of money which is going into real estate is not going to that extent.
Though the prices have not corrected, like I am in North, so I can say about NCR region, the prices have not corrected, though maybe what we are hearing that some deals, so some negotiations are happening, so you get some discount.
But as such, builders are holding on to their prices. So, I feel that because you have seen this negative sentiment and this has been going on for the last four-five months now. So, post Diwali that we were expecting something to pick up in Diwali, did not pick up to that extent.
But still, the builders have been able to sell off and their launches have been good. So, post this correction, which very difficult to say whether the stocks have corrected enough and they made a bottom, it is difficult to say that, but they may be close to a place where they should start consolidating.
So, again, if one is a long-term investor, this is also a domestic-focused, our own domestic-focused consumption story and there is definitely scope there to build on to a portfolio if you are seeing some correction and consolidation started to happen, then one can be looking at real estate also.
It was a mixed report when it came to the auto sales for the month of February. While tractors saw an uptick, passenger vehicles you did not have the best of performance from Tata Motors, from Hyundai, or for that matter even Maruti but then again M&M was a winner through and through. Tell me, how is it that you are analysing right now the entire auto construct?
Neeraj Dewan: I feel that what happened in the budget also, so that will also help the auto companies going ahead. So, there is fear that duty cut will happen, there will be competition coming in from outside India, that may happen.
Then, those companies that come into India, for them to settle down and to come to a reasonable scale of what Maruti and M&M four-wheeler space, passenger space already have, is going to take a long-long time and the kind of volume that M&M does or Maruti does, it is very difficult come close to a fraction of that also so soon.
So, according to my understanding, auto space should do well. There were a lot of fear that the numbers will be really bad, but when you saw M&M numbers, Maruti was not that great but it was not as bad as people were fearing on the street also.
So, I feel that these are opportunities for these companies. From here on though the numbers may not immediately start showing a good uptake, but they would start showing some improvement that they saw in the previous quarter.
I wanted to understand your view actually in particular when you talk about the financial theme because right now, everyone is only talking about financial theme as the next go-to sector, the one that is looking fairly valued at this point in time. What is your take coming in on the financial space? And in financial space, where would you actually park your money? Will it be the NBFCs? Will it be the capital market plays or your pure banks and in banks will it be the private sector bank or the PSU space?
Neeraj Dewan: So, one is that strong private sector bank definitely that is one space one should stay invested and should be looking at opportunities if there are dips there. And second is the PSU banking space. PSU banking space, you go to the good managed banks, the ones which have been showing better numbers.
State Bank definitely is top of the page that is there and besides that also there are smaller banks, like below State Banks, you can look at PNB which last couple of quarters the numbers have been good.
Asset quality is now not deteriorating, it is improving only. And they have good assets, good recoveries that are happening for them. So, then, even look at banks like Bank of Baroda or Union Bank.
So, besides the space, the capital market I would look at asset management companies, so that is where though they are correcting right now with the markets correcting, they may correct a bit more also if markets do not make a base and start consolidating and going up.
We have seen that long-term money is still coming for asset management companies and they have strong compliance, strong franchisees which will go through this slow phase and they come back stronger and they also you link it to the tax cut that happened in the budget, if there is more money, more investment can happen so that can also gradually improve for them. So, these are the kind of themes I am looking in the financial space.
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