Sudip Bandyopadhyay on 6 stocks to buy on dips | Economic Times

SBI, AB Capital and Max Financial in the BFSI basket and Dalmia Bharat, Deccan Cement, JK Lakshmi Cement or a Birla Corp in cement basket are rge companies that should do well, says Sudip Bandyopadhyay, Group chairman, Inditrade Capital. Is this the time to buy on dips or should one wait it out?Investors who are going to spend little time in the market, picking up good quality stocks is the right thing to do. There cannot be a better time. I do not see the Indian market going down significantly in the next one or two years. The kind of liquidity we have seen coming to the Indian market and the way the global liquidity scenario is poised, there will be increasing volatility on the back of US bond yields going up and oil prices going up and down. But these are short-term phenomena and if one is planning to spend time in the market, buy good stocks. That has always been my advice and that will continue to be my advice. Domestically, corporate performance is getting better and better. At some level, market pricing was out of sync with corporate performance, but that is catching up. Quarter on quarter companies are performing and the profit ratios are improving, PE ratios are becoming more and more acceptable. A stock like Hindustan Lever has gone up to Rs 2,600 levels and then corrected to about Rs 1,900 levels. It has moved up again to around Rs 2300. It is a fantastic stock. If you fear a second lockdown, that is a place to go. Even if you do not fear a second lockdown or partial lockdowns, it is a fantastic company. It is doing very well. It has got all the ingredients with performances improving quarter on quarter. So why not pick up good quality stocks? Where do you find quality at a good value in the market?Well one sector which I have been liking for some time is the financial services and banks and NBFCs. If you have to predict economic growth of 8-9-10% for the next fiscal, the financial services have to grow at a much much faster pace. If the yields are going up now, that will translate into the interest rates going up and that will augur well for the banks and financial services companies. So at some level, one should look at financial services. There are excellent companies in the lending and insurance spaces, which even now can be picked up. One particular stock which has been attracting my attention recently is AB Capital. It has got a complete bouquet of financial services business. It has got insurance -- both health and life, it has got the asset management and it has got lending -- both NBFC and HFC. Now all these businesses have started performing very well. There is a value unlocking possibility with the asset management company getting listed in the near future. The basic financial services environment is already. In the insurance space I have been recommending Max Financial for some time on the back of the fact that this is one of the best life insurance companies in the country today. They have a fantastic agency network, they were lacking the corporate banca part of it, but now with the Axis Bank tie-up, that worry is behind them and valuation wise, if one compares with HDFC Life, it is still in a much better position. So one can pick it up. As far as the banking space is concerned, SBI has been my favourite for some time. It is a fantastic stock to buy at Rs 360-370 levels. All the subsidiaries are performing exceeding well, value unlocking is happening and the bank does not need to go and raise money in the near future on the back of the fact that the subsidiary value unlocking is giving them quite a lot of liquidity. Asset quality is improving continuously and so if we have to look at banking, SBI is where we should go. While the spike in yields bodes well for a lot of the companies in the financing space, what about the other ones? To what extent would these yield levels, inflation levels be tolerable according to you?RBI has been handling the situation in an extremely calibrated manner. While the 10-year bond yield has settled at a level which the RBI wished it to settle, the 15-year has gone up. As the RBI is monitoring the situation very carefully, I am sure it will not let the inflation start running away ahead of their plan and they will continue to monitor it.So while inflation is good and shows that growth is coming back to the economy, it will not be a runaway inflation scenario. And if it is handled in a careful and calibrated manner, I do not think we need to get worried. It is a phase where we will see a rapid growth in consumption, rapid growth both in capital investment and of course public expenditure. It is actually the beginning of that cycle, private capex has been lacking in India and for quite some time. One can pick up a good consumer durable company, a good construction company, a good infrastructure company or even a real estate company with a good time horizon and will make money. Look at what is happening in real estate. The challenges the sector faced -- starting with the RERA, demonetisation, GST -- are all settled now with government support and concessions, different state governments are giving on stamp duty. It is raring to come back and give fantastic results. We believe that very well organised real estate companies with a clean balance sheet like DLF should do very well over the next few years. On the construction side, L&T is the perennial favourite. It is a great story and one has to capture the entire India growth story there and can pick up that stock. Cement is a proxy of the entire spectrum of activities which we are talking about. A good cement company can be picked up, it can be a Dalmia Bharat or a Deccan Cement or a JK Lakshmi Cement or a Birla Corp. We are very bullish on these companies.