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Today is the last trading day of the year and the last day of the year and the decade. What is the feeling that you are getting going into the next decade in terms of equity structure? Is it going to be a roller coaster ride like last year or are we going to have a one-way move to begin with and then may be follow through from there?
In the year which has gone by, Nifty has been up 13%. But right through the year, only a few stocks contributed to the upside and there has not been a broader participation. In 2020, at least in the first three months, things do not look that great in terms of the economic growth or the earnings picture.
People would continue to focus on companies where there is some degree of growth visibility. Once we have some sort of revival in the economy and risk appetite is back as also the flows, you will see broader market participating in a big way.
At least for now, it looks like the market would continue to focus on the same bunch of stocks which have been performing well.
Where could we look for some opportunity? Some of the select NBFCs like Muthoot is seeing a great move. We have some selective names run up as well. Some of the smaller names would you look at perhaps further potential going forward in 2020?
Yes, when we are talking about NBFC sector per se, a large part of the damage is already behind us. You would see certain companies which have gone through too much of a correction or grind, experiencing some sort of revival. So, something like L&T Finance or for that matter some of the smaller banks which have been listed would definitely see a buying interest. But yes, you would continue to see a larger focus on the well capitalised NBFCs where growth is also in play, something like HDFC or Bajaj Finance but selectively, people are open to the quality midcap companies in spaces including NBFC.
What is the BPCL situation? There has been talk of the government seeking a 30% premium from the BPCL stake sale. In that sense, the stock is going into a tizzy. But from an investor’s point of view, is it worth a buy at these levels?
Yes absolutely. There are two important factors that we should be really focussing on. One is how soon the government is able to initiate the whole process. We all know that it has got delayed but the sooner they are able to start this whole process, better it would be. Second, if any global oil major expresses interest in picking up the stake, that would determine to a great extent what kind of pricing BPCL gets over the next few months.
If you have some major oil players coming into the fray, it means the premium could be substantially higher against only a bunch of domestic players bidding for it. Looking at the strategic nature of BPCL and the diversified business that it has and more importantly the kind of petrol pump network that it has, it is extremely difficult for anybody to replicate that. Just to acquire land and build the whole thing would take years, if not more.
I have no doubt that the price BPCL would get could be substantially higher but it is totally dependent on how soon the government is able to start the whole process.
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