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Why Hemang Jani wouldn't be incrementally negative in this market

Since there is not much visibility in auto sector, we are staying away from the sector overall.

ET Now|
Updated: Aug 08, 2019, 10.50 AM IST
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The global sentiment is fragile but we should just wait and watch for some kind of positive news flow and stability in our markets rather than turning bearish, says Hemang Jani, Senior Vice President, Sharekhan. Excerpts from an interview with ETNOW.

Suddenly the global wave is turning. Crude has declined, Dow has turned volatile and gold is soaring?
Incremental news flow from the global markets is not positive. We are seeing a good amount of risk-off at this point of time as shown by the 10-year bond yields in the US and some of the markets in Eurozone.

Gold prices have really going up and coupled with that the crude oil price is down on fears of extended slowdown. This is happening at a time when US markets by and large have done so well year till date. It might provide a reason for correction over there but we have to remember that before US markets started correcting, our markets have underperformed big time. Most of the factors other than the fact that there is a slowdown fear etc. have been known in the market and there is no point trying to be incrementally negative for our markets. Yes, the sentiment is fragile but we should just wait and watch for some kind of positive news flow and stability in our markets rather than turning bearish.

There have been a few contrarian calls on some of the key auto names given the extent of decline and the bleak picture. What would you advice on Mahindra & Mahindra?
For the auto sector, overall things have been extremely bad and instead of giving some kind of a support to the industry which is going through an extended period of slowdown, the government has ended up aggravating the matter by introducing road tax and not helping in any manner. Any dramatic reversal at this point of time is difficult but once there is clarity on the kind of steps they are planning to take to revive consumption and boost confidence. At that point of time, we may see a bit of a reversal. For now, though the stocks have corrected because there is not much of a visibility, we are staying away from the sector overall. Once you have some positive news in terms of government action, that is a time we will evaluate our stance on the auto sector.

HCL Tech shows weakness in numbers but the management is sounding very confident going ahead. They are saying they have got a game plan. Would you buy into that or would you be a little wary of growth at this point?
Things are looking much better for HCL Tech. On the organic side, there are definite indications of improvement and the fact that in a difficult environment, the company could report a very strong dollar revenue growth in excess of 4% is definitely extremely positive. There is a bit of challenge on the margin front but in the current environment, the IMS business also provides a good opportunity and the overall deal pipeline is looking pretty strong. We definitely continue to have a positive bias for HCL Tech at this point of time.

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