Nifty should be at 10,000 by December 2017: Sanjiv Bhasin, IIFL

In a chat with ET Now, Sanjiv Bhasin, Executive VP- Market & Corporate Affairs, IIFL, says come the end of January, we are getting extremely bullish. This is when most of the news would be discounted and macros would start to play up positively.

Edited excerpts:

Banking is a big sector and by and large, all banks are consistently coming off . Even on the trading front, a lot of short OI is being added on all PSU names. What are you doing here as the valuations or the levels have come off dramatically from where they were trading some weeks back?

We suggested the strategy last Wednesday for the next six weeks, till the end of January. We have suggested to our clients to buy the Nifty B’s and the Bank B’s that is the ETF and every Wednesday if you buy that, you will get an average and we think closer to the end of this fiscal you could be looking for a 7% to 10% upside. We think the pain in the banks is overdone they are a proxy to foreigner selling because of the repatriation of the dollar. But like you pointed out, recapitalisation, bond yields, the sheer quantum of short term money which will result in treasury profit is a win-win situation for the PSU banks particularly.

If you ask me, there were four names on which we are very bullish -- State Bank of India, Bank of Baroda, Federal Bank and ICICI. ICICI is the only private bank which we think will show one of the best recoveries on the corporate side and write back should be the order of the key.

We have an accumulate but the six weeks we are accumulating the Nifty and the Bank Nifty and that is where we think the index will give you the cushion on the upside.

It seems the clarifications from the finance minister are not enough or maybe there are other things that are spooking the market but clearly there is just no respite from the selling that we are seeing three days until expiry. What has been happening at your desks? What have you been telling your clients to do?


I think the PM’s faux pas has got extended too far. We take more cognisance of how the finance minister has clarified at the earliest. It is just that the bears have got more emboldened with most global markets shut today to drive home an already weak sentiment. We know that the government may not be able to be in too much of a position till the end of the week but like we are saying 7800 to 8200 should be the range for the next week, ten days or maybe the next 15 days.

We think this is an accumulate zone. Closer to the budget, last week of January most of the results, the events would have played and given how the rupee has been strong against dollar, given that the macros are going to be visibly at the best for the government I see no reason in being pessimistic now. I think this is very good time to be slightly more greedy and buy the fear because we think in the next few months you should be up and about and the economy, corporates, everything should be in a much better position than we have made it out to be now.


I do not want to comment on Bharat Financial simply because; one) we do not comment on stocks as anchors but two) more importantly I do not quite know where is it likely to form a bottom if at all. At every single fall, experts have come and said that these are great valuations for Bharat Financial. People could selectively look at it and from those levels the stock has corrected another 20%. Clearly there is more pain then what people on the street believe there is. What is your gut feel or what does your valuation handbook say about Bharat Financial right now?

We have never had a buy on this stock. It is an avoid for us. The order is simple. Bajaj Finance is our top pick over there. Rs 775 is a very very clear rate where you should have extended your buying and Rs 25 upside downside could be the order of the key.

So for us it is Bajaj Finance, HDFC. On Bharat Finance like you said the price is all over the place, one of the FIIs over owned and over favourite stock is now bearing the brunt of some bad news and some problem may be which can extend into the second quarter but as a value pick given that cost of funding is going to be the lowest ever. I think margins and the write back should be much better going into the second half of 2017.

Do you think that going into 2017 you will see outperformance from consumer staples once again and that would not come as a surprise because there is certainty of growth there and the market would essentially want to buy these overbought names already?

Yes. Last February, the worst performing index were two -- the PSU banks and the metal index and they were sectoral funds which have around this time been the biggest outperformers. They are up about 100% because their core constituents of PSU banks and metals have turned out to be the best of 2016, not given this last week. I think consumer staples, even consumer discretionaries, consumer staples might be slightly expensive but they could be a very good proxy to play the consumption side once this remonetisation and all this imbroglio gets settled.

So we would say Bank Nifty and these two sectors along with metals which have also corrected can be outperformers and if you have a sectoral theme which is actually playing the consumption side on the discretionary or the staple side, it is a win-win situation extending into the second half of 2017.

You said one should go out and buy the fear that is there right now. What are the levels on the downside that you are working with even though you might be constructive on value buying at these levels?

It is difficult to say anything below 7800, 7600, 7700, 7800. All these are in the realm of things that fear cannot get extended but I do not see that expiry at 7800 to 8200. I see the first half of January also being in a very big range till the results come out. These six weeks are a very good time to average yourself out on every say Wednesday but come the end of January, we are getting extremely bullish. We think this would be the opportunity most of the news would be discounted macros would start to play up positively. For us the Nifty is going to be giving you at least a 25% return from here till next December end so even now that 10000 seems really out of place I can actually stick my neck out and say that you should be at 10000 by next December 2017.