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I do not see any green shoots, continue to avoid midcaps: Nischal Maheshwari, Centrum Broking

Whatever maybe the outcome of YES Bank fundraise, it will create a flutter in the market.

ET Now|
Dec 11, 2019, 10.14 AM IST
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ETMarkets.com
Nishchal Maheshwari-1200
It is still time to be with the quality names where you are seeing very strong cash flows. There is total uncertainty in the market and people are hiding behind the quality names in the market. I do not see that changing for at least another quarter, says Nischal Maheshwari, CEO- Institutional Equities, Centrum Broking. Excerpts from an interview with ETNOW.


What did you make of the outcome of the YES Bank board meeting?
It was not a confidence booster. Most of the market was expecting that they would accept one of these offers and should have recommended a name to RBI. But they are still considering and they have not spoken about all the other public funds offers. It is not very inspiring for the market at the moment.

While the Nifty resilience continues, that also now seems to be on the verge of caving in. We are grinding down lower slowly and of course there is no recovery in the broader market?
That's what we have expected for some time. In our last strategy report, we had written that there is a wide gap between what is happening on ground and what is really happening on the market.

The market had started going towards midcaps. Our thought was very clear that midcaps should be avoided at the moment. It is still time to be with the quality names where you are seeing very strong cash flows. There is total uncertainty in the market and people are hiding behind the quality names in the market. I do not see that changing for at least another quarter because I do not see any green shoots. People may keep on talking about it but I do not see any green shoots across the whole spectrum. One has to live through this uncertainty.

One thought the pool of banks favoured by the market was increasing. Some interest was coming back in SBI and some of the smaller PSU banking names also saw some buying 10 odd days back. That has stalled now. Some of these blue chips have also cooled off. Do you think the concentration of money with the Bajaj twins and HDFC twins is here to stay for a while?
That’s what I was saying. I this kind of uncertainty, people do not want to take much risk and that is where I think, whatever maybe the outcome of YES Bank fundraise, it is going to create a flutter in the market. Maybe in the next two-three months, that clarity will come and that will cause a huge amount of disruption in the financial markets.

What is your take on NPA under-reporting by SBI ?
SBI has come with a clarification saying that quite of bit of the amount RBI talked aout has already been addressed in the last quarter, but some more needs to be done. But looking at the balance sheet of SBI, I am pretty comfortable with this kind of number. Secondly, there are a lot of triggers as far as SBI is concerned. Whether there is going to be a SBI Card IPO or a SBI General Insurance which is going to get listed in the next one year, SBI is going to be a big beneficiary of NCLT resolutions.

The overhang on SBI is that suddenly the market is saying if the government has to find a home for YES Bank, it is going to be SBI. That has created some pressure on SBI. Otherwise, I find it a very good and decent stock.

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