There is renewed optimism throughout the PSU pack. What leads to this enthusiasm? Much of it has an undercurrent?
Yes, there is underlying electricity and there is also rising oil prices in the background. I am not very keen to play this price of oil on the rise and immediately go and buy ONGC type stocks. We’ve seen this play out a few times and there are plenty of other great domains on the market to buy. I don’t think I will recommend a purchase of some of these stocks at this point. But that said, there are more opportunities in the PSU and PSB space. If we deviate from the PSBs, I believe
Bank and Bank of Baroda look attractive at current levels. There may be a bit of a correction here and there depending on some of the quarterly results, asset quality numbers.
But if one buys PNB or Bank of Baroda with a time horizon of one year, investors will earn a lot of money. Likewise, pure, non-BFSI PSU companies like Bharat Electronics which is in defense electronics, Mazagon Dock which is again related to defense and submarine manufacturing look extremely good.
We can also look at some of the power companies like the ones that have increased. But even at current levels, NTPC is a great stock. For a long-term investor, energy stocks like NTPC are like annuity income. The dividend income is good, the business is established, and their upstream and downstream integration is fairly well established. So there are very few downsides to NTPC in the medium and long term.
When it comes to metals, some of the companies in the PSU basket look good. I believe in buying from companies that produce the ore, so the NMDC is even looking at current levels.
What area of IT would you be comfortable buying again?
I am very comfortable buying into HCL Tech at current levels. Outside of HCL Tech, we can look at companies that are at the forefront of digital transformation. Happiest Minds is another company that I’m looking to recommend a purchase for. Other than that, there are a few stocks in the mid-cap IT space that are doing pretty well as well. Mphasis, by the way, behaved remarkably well. Recently, they took over a state-of-the-art company, Blink, in the United States. It seems like an ideal solution for them to provide additional cutting edge technology to their customers across the world. Some of these stocks can certainly be recovered with a time horizon of one year or more.