Sensex at 60,000: Very Sparkling Market, Get Out and Get Money Now: Sandip Sabharwal


In my opinion, most banks are fair valued at this point or some might be overvalued. Difficult to argue for a significant increase in the short term, says Sandip Sabharwal, analyst, asksandipsabharwal.com.



What is the sentiment in the market right now? Is it the euphoria that is typically seen in the latter phase of the bull run?
Markets were euphoric for both retail investors and traders. There is a tremendous amount of euphoria, but that euphoria has been there for the last 1,500 points of the Nifty. It is therefore difficult to predict when this euphoria will peak. But yesterday’s move had reflections of extreme euphoria if we look at the movement of the Indian market against the backdrop of emerging markets.

China and Hong Kong have their own issues, but even markets like Brazil hit new lows and then rebound a bit. The markets are therefore very foamy and to that extent, this is the time when one can go out and withdraw money at your prices. Eventually people try to sell after the correction is complete and then people get desperate and try to protect their earnings. But when there is extreme euphoria, it is a good time to withdraw money and when desperation comes, it is the time when one can invest meaningfully.

So what is the strategy that the retail investor should adopt right now? Is this the time to make a profit, to keep the powder dry whenever the market corrects?
There are different categories of individual investors. Some only do SIPs in mutual funds. It’s very difficult for them to suddenly change their strategy, especially if they don’t really need the money in the next year or so. But there will be another group of investors who will either play directly in the market or invest wholesale and have much more exposure than they were hypothetically exposed to a year ago.

It makes sense for these investors to go out and withdraw at least 25% of their money, if not more. A lot of people suffer from issues of what to do when we are selling. It doesn’t matter what to do. The purpose of reserving profits and withdrawing the money is to hold it for a period of time. It’s not that as soon as it hits the banks you start to think about what to do with it. This is the challenge facing investors. I would say 25% cash for people who invest directly in stocks or even for those who invest wholesale in mutual funds is fine.

So there are different levels of exposure that people have. Some are heavily into stocks. They should be making a profit. For people who are only 5-10% in stocks and just started their journey, they don’t really need to change their strategy too much.

Since this market is spinning, high value stocks are coming back and the underperformers are catching up. NTPC, Could Coal India be next in line now?
This is always the last of the lot to complete and it is possible that many investors or traders who find it difficult to buy stocks that have become heavily overbought will jump into them. NTPC is a possibility because previously there was great concern that they would only focus on coal, now they are branching out into selling more solar power plants and there might be some interest. I wouldn’t rule it out, but it’s very difficult to predict whether these companies can create lasting wealth. In the current market environment, it will be a few stocks that will still have value but I don’t think they will generate huge wealth in the long run.

Watch Tata Power move the way he is. Are the markets going too far on what they plan to do with the electric vehicle business?
This is typical of a bull market where the ads move the headline. When the markets aren’t that euphoric, it’s about real performance. These days, companies are announcing diversification, acquisitions and stock zooming. This is typical of the euphoric bull phases. Even in the case of Tata Power, the impact of the changes they are trying to make will be felt in a few years. But the markets are trying to take this into account. We see the same thing in the case of predictions or projections of many companies in terms of purchase ratings; these are based on 2024-25 earnings as most executives struggle to predict what they will do in the next two quarters.

So Tata Power, JSW Energy zoomed in on the anticipation that there will be a significant shift in their business dynamics. There will be a change, these companies are changing for the better but it will be a very slow process.

Real estate is making a comeback. Why don’t HFCs really like the kind of poll positioning that housing finance companies have enjoyed in the past?
The dynamics of HFCs have changed dramatically because there are several factors. Most banks have historically focused more on business lending, some have focused on personal lending, but housing finance was not that important as it obviously has lower margins than many other consumer loans. or to companies. Today, most banks have become aggressive in this area and housing finance rates have fallen to historically low levels. Typically, banks have their own deposit franchise, which most NBFCs do not.

So there will be a significant margin for most housing finance companies in the future and this is something the market has started to take into account. The big story for housing finance companies might not necessarily play out just because home loans are increasing because the number of participants has increased dramatically because the growth in business loans is not there. Many banks are now focusing on home loans and the HFC market share will continue to decline.

Will the banks move the markets forward?
There are two assumptions that the market is going to rise significantly from here which in itself is a questionable premise as the markets are in an area of ​​deep euphoria and to that extent I don’t think we’ll see a huge increase.

The second part is the banking industry as a whole according to the latest RBI year-on-year data, as of now, the system’s total credit growth is 6.5%. Thus, banks as well as NBFCs are fighting for growth. Many analysts are forecasting 12-15% growth for banks. I think there is a lag in expectations and to that extent most banks are rallying due to the anticipation of a lesser impact due to the second wave of Covid. But the real money will be earned when credit growth returns, which is not the case now. Overall, most of the banks, in my opinion, are rated correctly at this point or some might be overvalued. Difficult to argue in favor of a significant increase in the short term.


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