If you can just highlight some of your top favourites within the financial space. Well, of course, it is not just the MFIs, the gold financers, it is actually great news for many of these stocks, but which are your top bets within the financial space?Sandip Sabharwal: The larger bank can continue to do well, which include ICICI, HDFC, Axis, Kotak, etc. Some of the PSU banks could see a revival. So, because of the sheer underperformance, we have actually recently added into SBI also in our portfolios. The other part which could benefit, obviously the NBFCs benefit much more in a significant easing cycle than the banks, so NBFCs people have a wide choice like Manappuram, L&T Finance, Mahindra Financial, Bajaj Finance, etc, among the NBFCs. But then there are others also which could benefit. So, investors have a wide choice. But overall, for the NBFC sector, this what RBI has been doing over the last few months is a much more significant positive than banks per se because most large banks have 40-45% CASA deposits where the costing does not reduce so much immediately and it is more or less fixed, although most banks have cut rates by 25 basis points, but for NBFCs which tend to be bulk borrows, significant monetary easing is much more positive.
The realty pack, where is it that you find comfort to buy a fresh or add-in or even some of the HFCs, for instance, maybe that is a better play.Sandip Sabharwal: I like diversified NBFCs better. So, I would focus on those because only focused housing finance companies will continue to face more and more margin pressures as the liquidity eases. So, it is better to be in the diversified space. On the real estate sector, obviously this benefits the real estate sector. But as of now, I am not finding comfort in buying into any of these real estate companies at these valuations because the run-ups in most in the near term has been very substantial be it the market leader something like DLF already valued from 600 odd to 850, 880 something, so the rallies over the last one or two months in most of the real estate counter has been so significant. It is tough to find value. But on correction, we could still evaluate.
Where both the companies will actually see what they can do best. But it is a big issue that is now emerging for the auto companies specifically with the shortage of critical rare earth magnets rather coming in from China. What is your sense that how severe this could actually impact the Indian auto industry and other sectors as well, given the fact we have a lot of reliability on China when it comes to select magnets?Sandip Sabharwal: So, there is a lot of news to go on where the impacts could be. The direct impact is more on the auto side immediately but apparently be going to a electronics, etc. So, now it will depend on how fast. So, it is not a question of supply. The supply is there, the supply is not being given, so that is the issue.
So, whether it will get resolved or not, we do not know. Overnight there has been some news flow that China has approved supplies to some European and US customers. So, the point is, is India going to be singled out or is this issue going to be resolved? So, there are too many moving pieces. So, we need to watch out for that. EVs apparently will be much more impacted. So, to that extent, companies which have bigger EV portfolio or greater reliance on EVs only or two-wheeler EV companies, etc, those might be impacted more if it does not get resolved over the next four to six months.
