Buy HDFC Bank at current levels if you have a one-year plus time horizon: Sudip Bandyopadhyay

20000 seems to be in the bag. Where do we go from here on?

20,000 is definitely in the bag. It is a matter of time before we hit that. There are a few setbacks because the corporate earnings have been, in some instances much-much below market expectations. There are certain concerns as far as US corporate earnings as well. We saw that Tesla and Netflix earnings were much below what the market was expecting. So there is a little bit of caution, a little bit of profit booking, a little bit of consolidation near these all-time high levels Probably, it is a healthy thing.

Having said that, I think if the monsoon continues and does not really disrupt the economic activities and also corporate earnings, corporate performance continues the way it is, by and large continuing, it should be positive for the markets and we will definitely see 20,000 levels maybe next week, maybe the week after, but it will come. The question is, where do we go from here?

Our belief is that the market will maintain a positive bias. The primary thing which is driving the market and will continue driving the market is ample liquidity which is coming to India both through FIIs and also domestic HNIs and retail investors. The way the markets and the economy are poised, this will continue. China plus one factor or exit China, enter India factor is playing a big role in FIIs moving money into India and that will continue considering the geopolitical situation, considering what is happening as far as the Chinese economy and Chinese growth are concerned.

Do you think the leadership will change now? HDFC had its issue with respect to the merger that should be out of the way now. Kotak Bank has been in a slumber. Do you think even ICICI Bank will join the party?

HDFC Bank definitely should join the party. It has been in kind of a slumber. There was uncertainty around merger; what will happen to the retail deposits? How will HDFC Bank handle the business which is coming in? All these questions were there. And obviously, in such a merger, there are question marks. But on the ground, things are pretty robust. HDFC Bank definitely deserves a relook and probably a re-rating. I would not be surprised if HDFC Bank starts moving up very-very fast in the near future. We have been recommending a buy on HDFC Bank at these levels to the investors who have a one-year plus time horizon.

We also like SBI amongst PSU banks. SBI deserves a much better valuation and we will probably get to see that in the near future. Not only is the bank doing well, loan growth is good, and asset quality is improving, but the fact is all its subsidiaries have been performing exceedingly well. So it does deserve a re-rating. Some of the smaller banks, Federal Bank came up with numbers, probably it was not to the market satisfaction, but the activity around it, the QIP happening, a subsidiary getting listed and things like that will create buzz around the stock and I would not be surprised if Federal Bank also starts moving up pretty fast.What are your expectations from the upcoming Fed meeting?
The global markets have by and large baked in that 25 bps hike by the Fed and that should have absolutely no impact on that. What the market actually is very keenly going to watch is the pivot.

Overall, I think the soft landing, which the Fed was attempting and the analysts or the market was hoping for is becoming a reality and hopefully, things will remain in this manner. So overall, I do not see too much concern as far as global markets are concerned.

What is your take regarding the entire capital goods space?
I like this entire space for quite some time and I am bullish. In fact, I have been recommending a buy on L&T for the last one year and I think it has done well. But it is still not done as well as we would have anticipated. It deserves a much better valuation. Leave aside the announcement of a special dividend, buyback support, and things like that. There is a significant tailwind in all its businesses. Also, working capital management has improved significantly. They have got out of unrelated assets which is how they have generated incremental cash, which they are probably trying to return to the shareholders through buyback and special dividends.

The entire situation for L&T is tailor-made for a much-much higher valuation and an upswing and we are waiting for that. I would recommend buying it.

Also, the overall construction, infra power, cap goods space should also do well. In the power space, we do like NTPC quite a bit, and for some time it has moved up but still there are a lot of opportunities there. Their green energy business is developing pretty well and some kind of corporate restructuring announcement should be coming in the near future and that should lead to significant value-unlocking in NTPC as well.

Last week we saw Utkarsh Small Finance Bank had a stellar listing and debut on the stock market and even post the listing, the stock was moving up. Other than that, in the upcoming week, Netweb IPO will debut on the stock exchanges as well as Yatharth Hospital IPO is opening for subscription. So what is your take on all three of these IPOs?
Utkarsh was definitely a good IPO. It is a small finance bank which has done reasonably well. They operate in areas where the competition is relatively less. This is the UP and Bihar region where they are focused on. Even now, a significant part of their business comes from microfinance lending, where the margins are significant and they have an NIM of about 9.5% which I am sure they will try to maintain. Most importantly, the issue was appropriately priced. There was something left on the table for the investors and that is what pretty much we are seeing. They got a nice pop after listing. I think this is the way to go.

As far as the other IPOs which you talked about, I would not like to comment because I am not very positive on those stocks. And I will leave that out.