What Sectors & Stocks to look at now

In a market that is falling like nine pins, which stocks or sectors should you look at?

Ajay Srivastava of Dimensions Consulting likes Maruti Udyog, Tata Motors and Bajaj Auto in the auto sector. “I believe that Maruti Udyog is one standout performer which is there. A totally contrarian play would be Tata Motors, which will eventually come around into giving value. In two-wheelers, Bajaj Auto is a good play at this price, purely on account of the company’s demerger. We believe that the demerger, given Bajaj Auto’s price at Rs 2,000-2,100, should give substantial value to shareholders in the next six-nine months. These are the three plays that we are looking at quite closely at this time.”
In the cement space, Srivastava likes companies, which got capacity expansion running right through or almost peaking at capacity. In this space, he likes JP Associates. Speaking on the sector, he said, “Wherever we are seeing capacity coming up, it’s a strong play; wherever capacity has peaked out, there is nothing more going to happen there in terms of earnings surprises.”
According to Srivastava, with the kind of order book that it’s carrying on its books, there is no reason to worry about BHEL as a stock, for the next three years. He feels that it will outperform the rest of the pack.
On Bharti, he said, “If you look at Bharti it is reaching an inflection point, where the capex that they have done in the past is reaching capacity utilization. The new capex, which is almost USD 3 billion, is still to give revenues for the next two-three years. So, one can easily see and compare the valuation of China Mobile with Bharti, there is a way to go for the values.”

Neppolian Pillai of Modern Shares & Stock Brokers feels that the capital goods sector will hold on its own. “I think the capital goods sector is one of the strongest, the second strongest is banking, which looks like it is loosing steam and that could be the key.”
On capital good stocks, he said, “Most of them are near about their highs. It is still going to be a momentum play rather than a buying opportunity. At every fall one could trade but investing at these levels has not yet come in. One need to wait for some more correction in the sector to get in, but the sector is going to give only shallow falls. One needs to be a quick trader in that by trying to buy bottom and then try to sell the resultant high after that bottom. For investing, I think one needs to wait for sometime.”
On metals, he said, “One needs to continuously look at that sector when it comes down, to get into. One could play it as a momentum; you could play as an accumulation. The stock that catches the eye is Hindalco. If it falls up to Rs 165-160 levels, one can buy into it. One can trade Sterlite Industries as a momentum play for a rough target of about Rs 680 and Rs 727 that looks good as a momentum pick.”
According to Pillai, investors could look at Allahabad Bank and Bank of India in the banking space.
In the auto space, he feels the smaller auto ancillary stocks looks good from an investment perspective. “One can look Asahi India with a target of about Rs 130, which could be a return of about 30%. Another stock, which I like within the sector, is Tube Investments. I think Rs 63 to Rs 53 could be a buy zone. We should get a price target of about Rs 80 on the reversal, so that’s again an 20-25% return. One can look at Cummins India, a great stock with great momentum. This stock can do a target of about Rs 430. In auto ancillary, one can still invest on the downside,” he added.