If BJP gets about 270-275 seats and NDA more than 300 seats, then definitely there is going to be a rally in the broader market or the smallcaps and the midcap names, said Hemang Jani, Senior VP, Sharekhan, in an interview with ETNOW.Edited excerpts:
Sell in May and go away…what happened?We really cannot rely on these kinds of proverbs, especially in a market as dynamic as it is now, particularly when you have such an important event as election. We all know the kind of caution which was around because of that and the exit polls have provided some kind of surprise for all the market participants because the market was pricing in 230-240-250 kind of a range.
The exit poll has thrown up much better numbers for NDA and BJP and which is why we are seeing this rally. But our sense is that now that the market has run up, we are pricing in a best case scenario or the blue sky scenario. There can be some gaps between the actual numbers on 23rd and what has been put out by exit poll. The market does not seem to be pricing that in. I think that from now till 23rd, it definitely makes sense to be cautious in the market and it is not advisable to commit extra funds at this point of time.
Have we missed the bus? If NDA comes to power, will Nifty add another 1,000 points? Should we come at higher level and catch the next 10% or wait for a bad day?As far as the index and the few heavyweights are concerned which are actually helping this index, we are pricing in the best-case scenario. Even if you have an outcome which is in line with the exit poll, I do not think there is a case for a significant upmove in the index heavyweights names like HDFC Bank, HDFC, some of the FMCG names, etc.
But if you have good results in terms of BJP getting about 270-275 seats and NDA getting more than 300 seats, then definitely there is going to be a rally in the broader market or the smallcaps and the midcap names because they have underperformed and have not participated.
I definitely think that there is going to be a decent amount of rally there. We should be positioned to take advantage of this entire opportunity in the midcaps and the smallcap, in case there is a favourable outcome on 23rd.
ICICI Bank Q2 numbers are strong but every quarter SBI tell us the worst is behind us and then they come back and make some excuse. What sense does it make for anyone to buy SBI because SBI was like the bulwark yesterday. It led the market action higher. It was up 5-6%.Yes, what you are saying is right. For a long time, we have had some kind of a watch list and some guidance in terms of credit cost and slippages, but the actual performances have not been in line and which is why we have seen stark underperformance from some of the PSU banks.
But what we really need to understand is that once past May 23rd, we will know if there is going to be a very clearcut road map or plan in terms of recapitalisation at a time of the NPL cycle. The worst is behind them and then there might be a bit of a relief rally because of the sheer underperformance that we have seen from the PSU names.
The quarterly numbers of SBI were not that bad. On the slippages front, we have had some disappointment but the core operating numbers, the NII growth, the growth in advances was pretty good. You might see a bit of excitement around these names because of hopes of a stable government and expectation of policy action from the government. Some more upside is pretty much possible for State Bank of India.
Yesterday we saw quite a move coming into those infrastructure names – NCC, Sadbhav, L&T as well from the capital goods arena. Do you believe that this rally is likely to sustain? Would you continue to remain invested?What we saw yesterday was because of the exit poll outcome and an expectation that we would have a similar outcome on 23.rd But I definitely think we should wait for May 23rd and then take a call because that would give us a little bit of comfort that the sustainability of the upmove would be more comforting.
I definitely think that some of the infra names which are beaten down, particularly on the BOT space, on the road construction space and overall infra, are going to be re-rated and 25-30-40% kind of move can be expected.
We particularly like Kalpataru Power which has a decent amount of BOT assets and some of the power assets and railway business and also KNR construction which is purely into road construction. These are some of the companies that we are focussing on. But we should participate only on 23rd when we have a little bit of more clarity about who is going to form the government.

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