What has been your assessment of investment coming into Adani Group?
The investment coming into Adani Group from a credible foreign investor gives stability to the group as well as the overall market. Now I have not invested in Adani Group companies and I am unlikely to because of the nature of the business and there are still some uncertainties around. But for the overall market sentiment it is positive. Is there a tactical trade in PSU banks now not because of Adani but in general after the recent underperformance and what has happened to their underlying valuations do you think next three to six months banks could regain their mojo which they have lost this year?
Yes, banks come back, but I would think that instead of playing more on PSU banks, which could possibly like you said, tactical, cyclical bet could rally a bit more. But I think the larger private sector banks have also consolidated for a long time. So I think they also present good opportunities, stocks like ICICI, Axis, or even if you want to take a higher risk, instead of taking it on a PSU bank, you could take it on a bank like IndusInd Bank, etc. So these banks are much better placed given their overall CASA profile and the growth of deposits. For example, if you look at data which is put out by the RBI, the deposit growth of PSU banks is much lesser than the deposit growth of large private sector banks, and especially on the low cost CASA deposit side. So directionally long term, the fundamentals of the large private sector banks is improving much more than even the larger PSU banks, ex of SBI, where SBI took a big hit due to the entire Adani saga, it could see a bounce back.
What is your view on Reliance? It is gaining traction, it underperformed for the first month or the first two months now it looks like it is getting its mojo back.
Reliance after a long period of consolidation is looking decent in terms of valuations and in terms of the business dynamics of the refining business.
Retail business, which all over India across retailers are having a tough time at this stage, but I think that should see a revival. Telecom is doing fine. So I think overall, when this entire Adani issue came up, all the leveraged companies, etc., where people thought there could be leverage issues got sold out and Reliance also became a part of it for no reason. So I think after almost a two year consolidation, now Reliance, I believe is well placed. I think it should outperform the market this year and could give around 15% return to investors.