Market Watch | Dipan Mehta, Director, Elixir Equities on:

Markets

“I think it’s only natural that we are seeing a mild correction at this point of time, and no real reason can be attributed to it except that money may be flowing out of secondary market in preparation for the primary market. From this point on, you’re going to have a blockbuster primary market offering with many larger issues running into Rs 1000s of crores and some of them are concepts stocks and a lot of investor interest is there because of the nature of the business and the brand and the kind of business model which they have,” said Dipan Mehta, Director, Elixir Equities.

So apart from money moving out from secondary market being prepared for primary market, Mehta said, he cannot attribute any reason for this mild correction. Typically, we are seeing profit booking at higher levels, and yesterday’s figure for FII outflow and DII outflow, kind of spooked the markets as well, he added.

Micdap earnings

We need to be a bit selective and chemical companies, speciality chemical companies, cement companies, to an extent automobile companies may have a soft quarter. But medium to long term prospects are good, Mehta said.

“So on a bad numbers, if you see a correction, then that’s a good entry point, because long term fundamentals are great for these sectors. On the whole, for earnings season I would prefer to see the results and then take a call on the stocks,” he added.

Navin Flourine has been disappointing, one can wait for a correction, 15-20 percent is easily possible in the stock especially the way it has rallied and then kind of see where the valuations are and whether long term earnings for growth could be and maybe then look at it getting into the stock if you’re underweight speciality chemicals sector per se, he said.

“A bit selective as far as mid cap stocks are concerned. My sense is go with the companies which are reporting exceptional results and which have got good earnings momentum for the next couple of quarters or so. There are many which would come perhaps mainly, I would say in the unlock trader investment theme,” Mehta said.

IRCTC

Whether to buy on dips or stay away from this stocks depends upon whether you’re holding IRCTC or not, said Mehta.

“And if you are among the lucky few who have held on to the stock at any point of time, then it’s an easy decision. You just stay pretty much invested ride the momentum. There is a scarcity of that stock. And as and when fund managers are getting more inflows into their schemes, and if they are owning IRCTC then they are the ones who are driving the stock price up just to maintain the balance in their portfolio,” he added.

However, fresh investments are clearly avoidable, according to Mehta. These kind of valuations do not favour significant outperformance if you buy from these levels and there is always the risk that if there’s even a minor miss in the earnings, you may see a correction, he explained.