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Dipan Mehta , Director, Elixir Equities, says the earning season and the Trump presidency are the two important events or trends to look out for in 2025. Mehta is hoping for the best because the September quarter was pretty disappointing. Be it a mild turnaround in December quarter or a continuation of September quarter – that will determine the trend for the market.
The market can go either which way. It can rally back up to its all-time highs or correct further from these levels. Mehta also says that there is a good trading opportunity within the banks, especially tier II PSU banks.
He is more positive on them than the private sector banks, but it is a short term, maybe a few months, one or two quarter type of a play. In the medium to long term, he is underweight banks. What is your take on the fertiliser counters? How do you see this subsidy hike coming and which stock do you think will be the biggest beneficiary of this hike? Dipan Mehta: Coming to your question about subsidy increase, it is much needed because the soil composition also needs the adequate amount of DAP and other phosphatic fertilisers.
Obviously, the biggest beneficiary of this is going to be Coromandel International, which is India's largest DAP and phosphatic fertiliser manufacturer and it is a step in the right direction. Generally, fertiliser companies have not created great value. They are great trading opportunities because of a lot of government interference and the effect that monsoon has on their sales.
But by and large, within the entire space, we are quite positive on Coromandel International and that is one company which has scaled up its business well. The most important thing in the DAP business is backward linkage to get the right kind of raw material because those are generally in short supply and a lot of price volatility is there in those raw material costs as well which Coromandel has been working on. What are the sectors to bet on for the year ahead or is it going to be much more stock specific than the latter part of 2024 for us? Dipan Mehta: The first quarter of 2025 will be quite challenging.
There are two major events in our opinion. One is the Trump presidency and how they are going to react and make changes in the first few weeks of their presidency, that is going to drive a lot of global flows, global markets, so we need to be very attentive of what is happening over there and what impact it has on our economy and our companies, that is point number one. Stock Trading Masterclass on Value Investing and Company Valuation By - The Economic Times, Get Certified By India's Top Business News Brand View Program Stock Trading Market 104: Options Trading: Kickstart Your F&O Adventure By - Saketh R, Founder- QuickAlpha, Full Time Options Trader View Program Stock Trading Technical Analysis for Everyone - Technical Analysis Course By - Abhijit Paul, Technical Research Head, Fund Manager- ICICI Securities View Program Stock Trading Stock Markets Made Easy By - elearnmarkets, Financial Education by StockEdge View Program Stock Trading Renko Chart Patterns Made Easy By - Kaushik Akiwatkar, Derivative Trader and Investor View Program Stock Trading Market 101: An Insight into Trendlines and Momentum By - Rohit Srivastava, Founder- Indiacharts.
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These are two important events or trends to look out for in 2025. All I can say is let us hope for the best because the September quarter was pretty disappointing, and let us see if there is a mild turnaround in December quarter or the continuation of September quarter and that actually will determine the trend for the market. The market can go either which way.
It can rally back up to its all-time highs or correct further from these levels and it is just waiting for corporate numbers and what is happening in the US during the Trump presidency to decide which way to move. What are some of the themes that you have been working on within the market? It has been a rough and volatile patch since October or even before that for some of the midcap and smallcaps in particular. Having said that with all that is stacked up in the month of January with Trump taking over, the earning season, and then the Budget, what would be your sectoral biases? Dipan Mehta: Banks have not done well last year and this could be a year where there could be improvement in liquidity as also interest rate cut and maybe although NPAs may inch up a little bit, the volume of business also could pick up if the overall economy starts to recover and valuations are still kind of reasonable over there.
So, there is a good trading opportunity within the banks, especially tier II PSU banks. I am more positive on them than the private sector banks, but that is more of a kind of a short term, maybe a few months, one or two quarter type of a play. You Might Also Like: India to be hit as Trump 2.
0 will see start of trade wars; Budget 2025 will be one of continuity: Swaminathan Aiyar In the medium to long term, I want to be underweight banks because it is becoming a bit of a red ocean and the cyclicality also has increased and the gap between the PSU banks and the private sector banks has narrowed rapidly and that is not reflected in the valuations and they are competing products so the low-cost deposits which the banking industry was enjoying for so many decades, right from inception, those are under bit of a threat because of mutual funds and because of equity markets and entire financialization which is taking place. So, in summary, there is a trading play, trading opportunity in the banks, but medium to long term I am not that hopeful. What is your view on pharma because the entire CDMO play is something that the Street is quite bullish on.
Do you think there is more meat to this rally in pharma which has begun for the last two months at least? Dipan Mehta: That is right. Pharma shares have done very well over the last year as well. I would say that a lot of them are well discovered.
They are kind of well priced as well and they have had two-three solid quarters of very good numbers. I do not think it is like a moving train, I do not want to really enter in these stocks at these levels. But two stocks come to mind, usual disclosure we and our clients are invested, one is Sun Pharma, it should be part of a core holding of every investor because of the kind of strategy which they are following and mind you it could have a few soft quarters but the kind of strategy and vision the management has got in terms of developing a speciality portfolio will pay off very rich dividends in the longer term.
You Might Also Like: ITC investors may gain ₹20/stock after hotel demerger if tax bill doesn’t spike: Amnish Aggarwal Another company which is on our radar and we have an investment in it as well is Caplin Point because of its strong position in the Latin American market and also making very good progress in terms of US sales as well. So, these are the two good companies in our opinion within the pharma space. But right now with the way the rally is taking place within the pharma sector it is better to just wait and watch, existing investors can remain invested but from a fresh investment perspective I want to see the December quarter numbers before I make that judgment call.
What about the real estate pack? The index that has performed really well with more than 30% gain in CY2024. A report is actually saying that Mumbai market has registered its highest ever registrations. In CY2024, sales have been quite robust and going ahead the potential rate cuts are likely to improve the sales in Mumbai.
But given the run-in real estate plays, specifically, the ones focused in the Mumbai market, does any stock comes to your mind? Dipan Mehta: No, the real estate stocks are pretty well priced and the strength which we have seen in the real estate market, Mumbai and rest of India as well, is really quite surprising. I understand that the real estate market is on a 8- to 10-year kind of a positive phase but even within that there could be a few soft quarters which have not yet come and sales remain pretty much strong and more importantly we have seen that the net asset values are growing steadily quarter after quarter because of new projects or higher values in existing projects and good sales taking place over there. So, as an industry, it is on a solid footing, balance sheet quality is the best it has ever been and companies are focusing on cash flow and collection which is very positive.
So, their return ratio also tends to move up. But these stocks have rallied significantly and although I am not selling any of the real estate stocks which we own, I do not think these are the levels to buy to get a very strong outperformance. (You can now subscribe to our ETMarkets WhatsApp channel ).
