Do you think markets are now likely to slip into a well-defined range? Do you think a V-shaped rally is what we have seen in the market from March lows?
Obviously the market has had a decent rally driven by a good amount of liquidity largely coming in from foreign funds and also partly supported by the local mutual funds and SIP flows. So this recovery has happened largely based on the liquidity which has entered the market. The market continues to remain in the range and I think that range has not changed; maybe a couple of 100 points here and there on the Nifty but otherwise the range remains somewhere between 9,400 on the downside and 10,300-10,400 on the upside as far as the Nifty is concerned.
If it has to break above this particular range, then definitely you will have to have the participation coming in from some of the index heavy stocks and if that participation happens, then one could possibly ask for a sustained rally. Otherwise, the market would remain rangebound in the current period. I think more actions are seen in the individual stock-specific options vis-à-vis actions seen in the underlying cash market. So from that perspective, one will have to keep an eye on how the triggers operate the derivative markets.
What has been your portfolio activity in the month of June so far? Which are the stocks you have bought and which are the stocks where you have booked some gains?
We continue to hold on with our recommendations on companies like Reliance, companies in the insurance space, some of the quality NBFCs; a couple of them, of course, not more than that. Also the private sector banks. We continue to accumulate our investment position in these particular companies. I think we have not moved beyond that. Fortunately with the volatility in the market, there are good opportunities to enter at low prices and also allow us some gains on the upside. So I think that is giving us relatively a better grip on the market as far as managing the portfolio is concerned.
What are you buying in pharma because all pharma stocks with the exception of Sun Pharma are doing reasonably well?
In the overall pharma basket, each and every company would have a different strategy to play. The likes of Cipla and the likes of even Glenmark or Sun Pharma are basically heading with the speciality generic products portfolio. So that gives you more confidence that gradually these companies are likely to have relatively better pricing power with the kind of complex speciality generic portfolio they are creating. I think that gives more amount of confidence and visibility. We continue to hold these stocks but the more important part that we feel more convinced about is that they are heading in the right direction to beat the pricing pressure in the advanced market.
Cipla and Glenmark both remain in the main stake portfolio; part of our PMS as well as our other portfolios. So from that perspective, we feel reasonably confident that this strategy is working. The stock prices have actually scaled up which I think is a good thing but at the same time, the strategy on the long-term basis is more important and that is why we are more convinced about these couple of names which I have talked about.
The entire paper sector was on fire yesterday; all these stocks were surging after RK Damani bought five lakh shares in AP Paper. Do you think it is a story worth visiting or investing in?
I do not know. I think I am not tracking this sector. I am not a very big fan of this particular sector. It is driven by cyclical movements and I think too much quality play is also there. So honestly I think I would not comment on this particular stock.