'Infra space attractive'

In the first series of interviews for Smart Portfolios, today we have Siddarth Bhamre with us explaining his trading strategy and outlook on the equity markets. The head-equity derivatives of Angel Broking lays emphasis on valuations and liquidity as the two pillars of equity investments. In an otherwise volatile markets, Smart Portfolios extended gains for yet another week. Shishir Bajpai was the biggest gainer in the last five trading days, wherein his net worth soared 6.5 per cent to Rs 11.83 lakh from Rs 11.11 lakh in the previous week. The benchmark’s net worth was up 0.7 per cent at Rs 10.85 lakh. Ajay Parmar’s portfolio value jumped over a per cent to Rs 9.94 lakh. Siddarth Bhamre and Vinay Khattar also logged marginal gains.

What would your contribution be to Smart Portfolios Season III?
Sometimes it’s an investors’ market and sometimes it’s a traders’ market. In both the cases, liquidity plays an important role. Our objective would be to give both long-term and short-term ideas to investors.

The markets are not far from record highs. Do you see the markets reaching there in the current rally?
The FIIs’ cash-base buying is strong and domestic participants too are now participating in markets slowly but steadily. This gush of liquidity can certainly pull the markets to those levels. But this 300-point journey for the Nifty won’t be as smooth as it was for the last 600 points. Long unwinding and profit booking in some pockets of the market would give good opportunities to enter at lower levels, though the corrections won’t be severe.

What are your expectations and what would you advise investors to do?
October is a month of great falls. Though we don’t expect one this time yet caution should certainly be exercised. At these higher levels, the importance of stock selection increases because from here you won’t see anything and everything going up.

Given that Smart Portfolios is a year-long exercise, what would your investment strategy be?
The strategy won’t be fixed. It will change according to the market scenario. Right now, the strategy is to trade out this market and not wait for big profits. It is to stick to stocks with a decent market cap as getting into less liquid and small stocks could be hazardous if the market corrects.

The RBI may have signalled an end to the tightening cycle. What is your view on the bank rates in the near future? And how should investors look at the rate-sensitive sectors?
The sector has run up significantly and has been a major contributor to the current rally. Still, we feel there are some stocks, especially in the private sector space, where valuation comfort is still there and we would suggest buying. Looking ahead, here too we don’t expect a broad-based rally as valuations in most of them have reached the higher side in terms of the price-to-book value. We also like some of the realty stocks at this juncture, though they may not be high-flyers.

What are the stocks or sectors you would focus on?
The infrastructure sector is looking attractive in terms of the valuations. From the FNO (derivatives) perspective, there is a possibility of short-covering as most of the frontliners in this space too are near their support levels. We have again become active in this space after booking some profits last week. Among midcaps, we believe decent trading opportunities would be available in commodities and pharma companies.

What are the key factors you look at in a stock?
Valuation comfort and liquidity are the key parameters I dwell on the most. Buy low and sell high is another principle I follow and make a conscious effort to avoid chasing prices.

What are your targets?
Over a period of one year, our prime target is to outperform the underlying index and generate positive returns.

To view all the managers’ portfolio, please visit  www.smartinvestor.in