Promoters selling stakes bigger threat in the market: Sandip Sabharwal
ADVERTISEMENT What kind of sectors are you looking for at this point in time? A lot of sectoral churning is underway. The theme of this particular month has been defence, and also some of the counters from the railway side. But what is looking good to you right now?
Sandip Sabharwal: Defence stocks rallied following the Indo-Pak conflict and potential increase in orders. Some of the companies came out with very good results like Bharat Electronics, while results from some others were subdued. Railways stocks have bounced back from extreme oversold levels, like from last year levels, many of the railway-related stocks got sold off a lot, but there is no clear change in the railway investment theme at this point of time in terms of the railways picking up steam in terms of investing more like it did 2022 onwards.
So, these could be just bounces because the stocks have gotten sold off a lot. The results picture which has been pretty okay and in line with expectations. Some companies have performed above, some below and so there is nothing much out there. Markets are decently placed. The risk in the market is just the kind of promoter selling which we are seeing in the markets starting with the larger ones like SingTel, InterGlobe Aviation as well as ITC and then a slew of mid and smallcap promoters selling their stakes. I think that is the risk to the markets. Ex of that, the overall macro scenario looks okay.
What is the trend you draw up from the promoter exits that are happening? These are ripe valuations in the market and could not get any better. Is it warranting caution now?
Sandip Sabharwal: In some of these stocks, I would say yes, because if many of these companies are giving very strong outlook for growth for their companies and are coming out and selling huge quantity of their stocks at very high valuation and are getting absorbed by the institutional investors because the companies have given very strong guidance, that itself is a dichotomy because if you are so confident, why are you selling? On the other hand, for some of the larger companies like InterGlobe or BAT for ITC, etc, there we cannot surmise the same thing because in InterGlobe Aviation we have seen continuous sales by Rakesh Gangwal over the last few years and now we are coming to the end stage of that. So, hopefully over the next one year, all of that will get sold out. For ITC also, BAT needed the money and so they have sold. I would be more concerned about the small and midcap promoter sales rather than the bigger ones. But that said, even the bigger ones take out liquidity from the system and restrict market upside.
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