Maruti, ICICI and Axis bank good large cap picks: P Phani Sekhar, Angel Broking

P Phani Sekhar, Fund Manager-PMS, Angel Broking, in a chat with ET Now talks about his stock picks and strategies. 

Can you give us your top 3 picks that you see for this market right now? 

I think if you were to be in large caps, you cannot be ignoring Maruti Suzuki and ICICI Bank and then Axis Bank. But if you were to be in midcaps, I think the choice opens out there. 

See the market, as you are not seeing a lot of mutual fund inflow, you are not actually seeing a broad based rally in madcap. So the entire action is being confined to stocks that have earnings momentum or are in the news flow for one reason or the other. But if you step aside and see, there are a large number of stocks which have a lot of value and are waiting to be discovered. So I think that’s a good opportunity for investors. 

One of the stocks that we like is JK Tyres. It has immense value but is again suffering because of high rubber prices. But the moment rubber prices come down, I think it’s a stock to watch. 

Jyoti Structures has not performed for the last one year but it is again very compelling on the valuations. If one is a really a value customer, he can actually look at a Patni Computers which has corrected a lot in the last week it looks quite good at these levels. 

Is this is a time to sell anything? 

I would not necessarily agree. If one has to book profits that has to be mainly because your stocks have reached the target price and not because one feels that equities is going to underperform in the next 3 or 6 months. The reason for that is that there is a huge amount of under participation and under ownership as far as domestic investors are concerned. In the last 7 months - that is year to date - mutual funds have had a net outflows of 12000 crore and this market is being buoyed by FII flows of almost 47000 crore. 

So to that extent, you are not actually seeing any euphoria or over participation and you can actually say with some degree of confidence that the market will not go in for any meaningful correction because you are seeing a fair amount of scepticism and under ownership. So that will actually put a very good support to any correction in the equity markets. 

So I think that it has to be case by case approach. For example, we feel large cap IT stocks are near the top end of the band at least for the next 6 months. So it will be a good play to move and look at whether you can find some value in a stock like Maruti although it may underperform for the next 3 months. So I think that’s the kind of strategy that we are advocating to our investors.

(economictimes.indiatimes.com)