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Hemang Jani on why telecom, pharma & penny stocks are showing momentum now

FMCG, some private sector banks and even metal names are seeing corrections.

ET Now|
Dec 03, 2019, 10.36 AM IST
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Hemang Jani-Sharekhan-1200
It is time to be a bit selective with preferences and go for Biocon, Divi’s and select MNC pharma companies, says Hemang Jani, Senior Vice President, Sharekhan. Excerpts from an interview with ETNOW.

Is pharma back on your radar any particular stocks?
Pharma has seen a very selective revival in MNC pharma stocks. A whole host of companies have reported good set of numbers and because of under-ownership and strong visibility, a good amount of traction is being seen there.

Other than MNC pharma, wherever the companies are reporting either good performances or specific triggers like what we have seen for Biocon, people are getting into those stories. But broadly, at most of the top companies -- be it Sun, Lupin or Dr Reddy’s -- we are not seeing any strong numbers being reported either from the US markets or from the India market. So, it is time to be a bit selective here with preferences for stocks like Biocon, Divi’s and select MNC pharma companies.

The breadth showed signs of cracking up yesterday. The largecap stocks declined, FIIs have started selling and what is not supposed to move has started moving up! All the penny stocks and all the single digit stocks were up 5% to 10%?
What we are seeing in the market at this point of time is some kind of a rotation. So the sectors and stocks like FMCG, some of the private sector banks even metal names are seeing corrections and we are seeing momentum in telecom, select pharma and as you said, some penny stocks are seeing a bit of a momentum.
We are looking at some sectors emerging as the leaders in the pack -- be it NBFCs or telecom. We need to focus on those sectors.

-Hemang Jani



There is a case for some kind of a pause because in the last few days, we are seeing aggressive selling by FIIs and even the US markets are pausing at this point of time. I would not be surprised to see that pause. We are looking at some sectors emerging as the leaders in the pack -- be it NBFCs or telecom. We need to focus on those sectors. I do not think there is a case for a significant correction in the market at this point of time, given the strength in the sentiment.

How much higher could the telecom stocks go before we start using the word missed call once again?
Given the intensity of the price hike of about 40%, we are looking at the addition of almost Rs 50,000 crore to EBITDA. There is going to be 20-24% overall growth over the next two years with free cash flow being generated.

We have never seen free cash flow for telecom for the last three years. Now people are talking about that. I would not be surprised if Bharti and Reliance continue to outperform. This is what we have seen in the last few days, where Nifty was showing a bit of a pause. Reliance and Bharti were making new highs. There is definitely more room to go up -- 10-15% for Bharti and a similar kind of an upside for Reliance as well.

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