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In an interview with ET Now, Jagdish Malkani, Member, NSE, gives his views on the markets and his favourite picks. Excerpts:
ET Now: Non-Nifty, how do you view stocks in 2012, the broader market space?
Jagdish Malkani: The fact of the matter is the macro picture of the Indian economy is not great, but now all that is well known and frankly much of it is in the price. The fact that the budget itself may have some not-so-market-friendly measures, all that is in the price. And 95% of the market and the analyst community is gloomy, which itself is a good enough reason for there to be a rally.
I really do think maybe we are in the beginning of a rally and that too led by more mid-caps, which have been more popular, etc. So in the short run, especially January-February pre-budget, you could have a bit of a run-up, not humongous, but let's say 5000 Nifty is not beyond the pale of reason. And in that I would think the mid-caps would have a better run.
ET Now: What is it that you would be looking at and why is it that you like Max India?
Jagdish Malkani: I have a long list, but on top of my head I would say Max India is not a bad one, great play on insurance, good management, healthcare, great favourite of FIIs and good quality private equity players and the promoter Analjit has proved his mark in his other investments. This has come down from a high of 230 or something to around 145. Of course insurance a bit maligned by the ULIP story earlier this year and recently this whole general insurance motor pool account, etc. But it is all in the price and a couple of very prominent FIIs are very bullish, have bought into at higher levels. So this one could easily give you a 20-30% bump-up in 2012.
ET Now: Is there an earnings trigger out here? Have you tried to map their numbers as to what it will do in the next 12-18 months?
Jagdish Malkani: No. Going by insurance is a slightly more complicated play, actuarial valuations, how they are doing in the marketplace, market share. The softer things are certainly improving with every quarter and the management is very credible and management these days, especially in such bear markets, is crucial. So this has been pummelled recently by maybe some institutional selling, etc. So, this is an opportunity.
ET Now: What about your second stock then?
Jagdish Malkani: Another one in the IT education space is NIIT Ltd, again it has fallen off pretty sharply. It is around 37-38 as we speak. I like both the NIIT twins but NIIT Ltd. in particular still a great play on global IT education, the Indian IT story and the good news again is that they had divested their stake in the US subsidiary, which was a bit of a drain and that will help to, $110 million or whatever they were getting, which is a big number for them and that will help to pay off some of the debts. Again this combines IT, the falling rupee and the education story. So this could give you a pretty good bump-up from here.
ET Now: Any concerns on any of the two stocks that you recommended?
Jagdish Malkani: No. Certainly on Max, of course it is in the price. The insurance FDI story is getting dragged out, it may not happen and this whole general insurance motor pool accounting, how much because just in the last couple of days IRDA has again taken some adverse measures after giving them some good news, which was it's a bit complicated that the whole motor pool account was a big concern for the insurance industry.
Now, they have raised the provision norms a bit. Which is why there has been weakness in this and Bajaj Finserv, both of which I like. So those are the concerns. As far as NIIT Ltd goes, overall IT stocks being sort of downgraded and some of the other education stocks, especially some of the bigger stars of last couple of years, I would not take names, if they all get pummelled down, then NIIT Ltd. may also, but that will only be an opportunity.
ET Now: What is the target price that you would be looking at for your recommendation?
Jagdish Malkani: Max could easily be 180 in the next few months. I will be conservative because these are rough times, but 180, maybe even 200, is quite within the realm of reason and Rs 50 for NIIT Ltd should be very feasible.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
In an interview with ET Now, Jagdish Malkani, Member, NSE, gives his views on the markets and his favourite picks. Excerpts:
ET Now: Non-Nifty, how do you view stocks in 2012, the broader market space?
Jagdish Malkani: The fact of the matter is the macro picture of the Indian economy is not great, but now all that is well known and frankly much of it is in the price. The fact that the budget itself may have some not-so-market-friendly measures, all that is in the price. And 95% of the market and the analyst community is gloomy, which itself is a good enough reason for there to be a rally.
I really do think maybe we are in the beginning of a rally and that too led by more mid-caps, which have been more popular, etc. So in the short run, especially January-February pre-budget, you could have a bit of a run-up, not humongous, but let's say 5000 Nifty is not beyond the pale of reason. And in that I would think the mid-caps would have a better run.
ET Now: What is it that you would be looking at and why is it that you like Max India?
Jagdish Malkani: I have a long list, but on top of my head I would say Max India is not a bad one, great play on insurance, good management, healthcare, great favourite of FIIs and good quality private equity players and the promoter Analjit has proved his mark in his other investments. This has come down from a high of 230 or something to around 145. Of course insurance a bit maligned by the ULIP story earlier this year and recently this whole general insurance motor pool account, etc. But it is all in the price and a couple of very prominent FIIs are very bullish, have bought into at higher levels. So this one could easily give you a 20-30% bump-up in 2012.
ET Now: Is there an earnings trigger out here? Have you tried to map their numbers as to what it will do in the next 12-18 months?
Jagdish Malkani: No. Going by insurance is a slightly more complicated play, actuarial valuations, how they are doing in the marketplace, market share. The softer things are certainly improving with every quarter and the management is very credible and management these days, especially in such bear markets, is crucial. So this has been pummelled recently by maybe some institutional selling, etc. So, this is an opportunity.
ET Now: What about your second stock then?
Jagdish Malkani: Another one in the IT education space is NIIT Ltd, again it has fallen off pretty sharply. It is around 37-38 as we speak. I like both the NIIT twins but NIIT Ltd. in particular still a great play on global IT education, the Indian IT story and the good news again is that they had divested their stake in the US subsidiary, which was a bit of a drain and that will help to, $110 million or whatever they were getting, which is a big number for them and that will help to pay off some of the debts. Again this combines IT, the falling rupee and the education story. So this could give you a pretty good bump-up from here.
ET Now: Any concerns on any of the two stocks that you recommended?
Jagdish Malkani: No. Certainly on Max, of course it is in the price. The insurance FDI story is getting dragged out, it may not happen and this whole general insurance motor pool accounting, how much because just in the last couple of days IRDA has again taken some adverse measures after giving them some good news, which was it's a bit complicated that the whole motor pool account was a big concern for the insurance industry.
Now, they have raised the provision norms a bit. Which is why there has been weakness in this and Bajaj Finserv, both of which I like. So those are the concerns. As far as NIIT Ltd goes, overall IT stocks being sort of downgraded and some of the other education stocks, especially some of the bigger stars of last couple of years, I would not take names, if they all get pummelled down, then NIIT Ltd. may also, but that will only be an opportunity.
ET Now: What is the target price that you would be looking at for your recommendation?
Jagdish Malkani: Max could easily be 180 in the next few months. I will be conservative because these are rough times, but 180, maybe even 200, is quite within the realm of reason and Rs 50 for NIIT Ltd should be very feasible.
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