Mehraboon Irani of Nirmal Bang Securities expects Indian markets to rally despite poor macros if the European central bank delivers what it has proposed. He expects long time underperformer oil and gas major Reliance Industries (RIL) to be a leader if Nifty crosses 5,350 levels. "People are looking at Reliance with renewed optimism and more enthusiasm. The risk trade is coming back to the market. If we are going to go up further, Reliance possibly could be one of the outperformers in the market," he elaborated.
Further he says, now is the time to considering sugar stocks and be upbeat on the sector.
Irani is bullish on Balrampur Chini . "Its balance sheet vis-à-vis Bajaj Hindusthan is looking much better." However, he shuns Renuka Sugar because it is suffering from balance sheet problems due to Brazilian acquisition.
Below is the edited transcript of Irani’s interview to CNBC-TV18
Q: What did you make of the way Reliance led the market yesterday and what is your call on Reliance?
A: The stock has underperformed for such a long period of time and possibly is one of the worst performers so we are at the levels at which we are. Over the last four years, there was definitely enthusiasm among market about the Reliance stock. There are reports about having had fruitful talks with the oil ministry as far as the KG-D6 thing goes.
The Singapore refining margins have gone up from USD 6 to around USD 7.5-8 as compared to what it was last quarter that also has enthused market. The rally which we saw was the highest one day rally in the Reliance stock over the last atleast two-three years, if I am not mistaken, this makes me feel that possibly Reliance could lead the market on the upside.
People are looking at Reliance with renewed optimism, more enthusiasm and for all you know the stock could possibly lead the markets on the higher side if we are going to see the market move up further over 5,350 levels, which could happen. If the ECB actually ends up doing what it proposes to do, it could be a great global rally India included despite its problems. The risk trade is coming back to the market. If we are going to go up further, Reliance possibly could be one of the outperformers in the market.
Q: In the list of sugar stocks that you track, which is the most active one right now, which one you would pick for the medium-term?
A: There is reason to possibly start thinking positive about the sugar sector and about the sugar stocks. The one which absolutely stands out right now is Balrampur Chini. Its balance sheet vis-à-vis Bajaj Hindusthan is looking much better.
I prefer UP based companies and therefore I am keeping Renuka Sugar out. Renuka also has problems in the balance sheet right now because of the loans taken for Brazilian acquisition. Balrampur Chini would be my first bet and the second bet also would be Balrampur Chini followed by Bajaj Hindusthan.
Q: What is your assessment of Reliance and Oil and Natural Gas Corporation (ONGC) and how two of these stocks would move?
A: I am quite positive on Reliance. After underperforming for so long, this is a stock could make the markets move up about 5,300-5,350 levels decisively. It could end up being an outperformer. On the whole, I am a bit aggressively positive on the market and that has largely to do with the global factors.
If the ECB ends up doing what it states it will do, it will create great rally in the stock markets across the world India included despite these problems. If that happens and if I stand right on that, Reliance could possibly be an outperformer.
It has been the biggest underperformer in the market over the last four years. People are looking at it with renewed optimism, there could be a minor correction, but if we go up further from here, RIL could be the stock which could lead the markets up.
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