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Irrespective of fundraising, selloff in YES Bank to continue: Rahul Shah, MOFSL

Post the QIP, YES Bank stock had reacted negatively and I do not see a major upside in the stock. Irrespective of whether YES Bank manages to raise funds or fails to do so or even raises it partly, there would likely be a selloff in the stock. Near term, there could be a lot of noise on the Street.

ET Now|
Updated: Dec 11, 2019, 09.17 AM IST
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Near term, there could be a lot of noise on the Street. But the stock has been volatile, any way. So, I would not rather punt in it, says Rahul Shah, Vice President, Broking & Distribution, Motilal Oswal Financial Services. Excerpts from an interview with ETNOW.

All eyes are on YES Bank. There are three fundraising scenarios: a) they manage to raise the declared amount which is $1.2 billion; b) if the fundraising does not pull through at all; or c) they manage to raise it partially. How do you see the market reacting to all three scenarios?
Since last few months, the Yes Bank stock has been pretty volatile. Coming back to your question on whether they will be able to raise $1.2 billion or more, I think the markets have discounted all the three scenarios. I do not think there could be a major upside in any of the scenarios. The last time, post the QIP, the stock had reacted negatively and I do not see a major upside in the stock. Near term, there could be a lot of noise on the Street. But the stock has been volatile any way. So, I would not rather punt in it. Look at RBL Bank. Post QIP, the stock has fallen 10%. That gives a clear picture. In case of YES Bank also, there would be a selloff in all the cases.

The external environment is looking fairly slow and there are indications of its worsening going forward. What is the long term story for companies that are very closely linked to capex?
All these things -- slowdown and macroeconomic factors --have obviously been forecast. Now, most of the numbers are negative. Coming back to the capex cycle reviving, all the stocks that have underperformed in last 3-4 years, have been big time underperformers. So, there is a sure case again this cycle will start reviving in the near future. That makes it very interesting. Normally, Thermax and the entire industrial material spaces have underperformed. Cummins is there, Thermax and to some extent L&T. All the three largecap stocks are looking interesting in terms of reviving the entire cycle moving forward.

What is your outlook on the real estate space?
I have been very bearish on real estate stocks for quite some time and I personally feel there are a lot of other opportunities playing into real estate. I would still avoid the real estate play, including the large names. One can buy some corporate banks rather than playing directly into real estate stocks.

Given the sentiment right now, would you stay away from the broader markets, look at the traditional defensives or prefer to just sit on the sidelines?
For the last one year or so, a handful of stocks have corrected and those stocks keep on performing. The trend is very clear. Private financials, good insurance plays and all the MNC consumer stocks have been performing. We would continue to bet on all these three sectors .

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