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Sanjiv Bhasin, Director, IIFL Securities, says “ we exited Paytm and Zee as well. These have been two of the weak calls and we wanted to get into better plays because this underperformance might stay for a longer than expected period and who wants to fight uncertainty in a bull market? If they cannot perform at 22,500, then God forbid, if we hit 20,000, we will be in the doldrums. So, if you have a slightly longer-term view, it is better to get into more marquee names like UPL, GAIL and Indiabulls Real Estate, which we have done in the recent month.” There are a lot of block deal actions on D Street. Axis Bank, Gland Pharma, Shilpa Medicare what have you, all are in the spotlight. What do you make of it?Sanjiv Bhasin: Big block deals and a plethora of new issues is typically the sign of a bull market reaching some sort of a crescendo. It is not that there is a near-term top, but it is telling us that exits and entries are at full flows and particularly in some of the longer-term private equity or equity with money which had entered about two years back and now are seeing very bright exit opportunities. Bain Capital came into Axis when it was closer to Rs 450-500 and when a change of guard was evident with a handover from Shikha Sharma. I think the bank has more than doubled from there. Like we said it is a glass half full half empty. It indicates the left out feeling where people are looking for excellent stocks to pick and an exit for old people who have been holding and now want to encash as the bull market reaches a crescendo. So let’s be a little watchful here. I would say some of the largecaps are still looking attractive, but it is time to be a little cautious because the market looks overstretched on all parameters. Where can investors find a buying opportunity and where is the market looking toppish like you just highlighted.Sanjiv Bhasin: The buying opportunity continues to be stock specific ways and some of the PSUs have outperformed, particularly as a result of the China effect yesterday on iron ore or caustic soda or specialty chemicals which are making a comeback and in turn we will see effect on the Indian side. UPL has been one of our top picks which we think is a very good relative play. It is just trading at one time price to book. It is the largest specialty chemical player in India and one of the largest in the world. They have already indicated their divestment in the sense that they want to encash part of their Advanta stake which is valued at something like $9 billion and that could be a very positive way in reducing your debt structure because return on equity will improve. Secondly, the crop seeds business particularly sunflower, corn, canola is seeing an uptick in prices. At Rs 485-490, UPL is very skewed towards an upside. I do not rule out Rs 650 levels coming in the next one year or maybe end of this year and this would be a perfect buy. Second would be GAIL which is poised to come out with very good numbers and we have seen gas prices and the distribution flow getting very strong. GAIL would be my top pick but be cautious that it is at a 52-week all-time high in nearby, but I still think there is a 10% upside there.Lastly the third name would be Indiabulls Real Estate which is a grossly undervalued stock and now with capital infusion coming in from the likes of Embassy, Blackstone and Poonawalla, we have very marquee names. Rs 4,000 crore has been committed by very marquee names and it tells you that the land bank which they own is all owned by them. I think this stock is due for a re-rating. It has moved sharply from Rs 110 to Rs 138, 140 but I still think this stock by the end of the year can hit Rs 250 easily. So, these are two-three marquee names. Rest, we would be little cautious on the index over here because the weight of Reliance and L&T and maybe a couple of stocks is seeing that the ETF inflow is now nearing a crescendo. What is going on within the entire banking space because while the Q4 updates have been fairly healthy, it does not seem like anything is incrementally wrong. They have not quite been participating in this largecap-led rally that we have witnessed. What is your take?Sanjiv Bhasin: Correct and that was more to do with the weightage of HDFC Bank and the underperformance. Private banks are starting to perform and I have been of the view that one should take some money off the PSUs and get into private banks. I still think HDFC, ICICI, Axis, Kotak are going to lead from the front and if anything, the Bank Nifty has to go to 50,000. But look at some smaller names, RBL Bank, Dhanlaxmi Bank and some of the mid and smallcap banks are looking very attractive. Their numbers, their credit deposit ratio, low rates, all these are going to add up to positive numbers. If anything, the guidance from HDFC Bank has been positive as far as reduction in credit deposit ratio and we know that the inflows into equity, SIPs and mutual funds has been a cause of concern on the liability side. But now with the credit expanding, the bank's credit offtakes have been very strong. I think private banks could come out with stellar numbers. So, overweight banks, particularly the largecap private and select midcap banks. What did you do with your Paytm holding eventually? Still holding on?Sanjiv Bhasin: No. As a disclosure, we have exited Paytm because we thought that the underperformance might continue. We got the opportunity, we exited Paytm, we have exited Zee also. These have been two of the weak calls and we wanted to get into better plays because this underperformance might stay for a longer than expected period and who wants to fight uncertainty in a bull market? If they cannot perform at 22,500, then God forbid, if we hit 20,000, we will be in the doldrums. So, if you have a slightly longer-term view, it is better to get into more marquee names, which we have done in the recent month.

Gold has seen a phenomenal rally over the last couple of months. Between 12th February 2024 and now, gold has risen 17%. During the same period S&P 500 is up 3.6%, DXY is almost flat and US 2Y yield has risen from 4.47% to 4.75% i.e. 28bps.Gold has rallied despite 'risk on' and despite rates firming up which is quite unusual. These correlations are hard to comprehend and therefore one needs to enquire if any other dynamics are at play.The US government is piling on debt at a tremendous pace and US procyclical deficit spending is perhaps what is keeping the labor market and economy afloat despite such elevated interest rates. The US fiscal deficit as a percentage of GDP was 5.3% in 2022 and 6.2% in 2023, elevated by historical standards when the economy has been normal. Debt to GDP which had spiked post COVID, seems to have stabilised around 120% of GDP.Shifting sands of global geopolitics and global trade dynamics coupled with concerns around US fiscal profligacy could be responsible for the surge in gold prices we are seeing right now.The de-dollarisation narrative has been around for long. It was always believed that de-dollarisation would not happen overnight and that it was likely to be a long drawn process. One can't help but wonder if it has started manifesting itself and whether this is just the beginning. Looking at the US dollar against a basket of other major fiat currencies may not reveal the true picture as other economies are not sailing in a boat which is very different. Therefore, the dollar may not weaken as much against other major currencies. Gold could be the biggest beneficiary of the de-dollarisation theme.Also, as other central banks look to increase their holdings of gold and buy fewer US treasuries, the Fed would have to think about ending balance sheet rundown sooner. Besides the question of when and how much the Fed would cut rates, the question of when it will level off its balance sheet is equally important. The US interest expense has soared to 2.4% of GDP and is likely to rise even further. This compares with an average of around 1.4% of GDP in 2015-2020. The US government will need help from the Fed to contain its interest expense considering the size of treasury issuances on account of higher deficits and refinancing of maturing debt.We, therefore, prefer holding on to long gold positions and also believe long duration in US treasuries is a position that could be rewarding over the medium term.(The author is Founder and CEO IFA Global)(Disclaimer: Recommendations, suggestions, views, and opinions given by experts are their own. These do not represent the views of the Economic Times.)

Private equity firm Bain Capital on Tuesday likely sold a 1.1% stake in Axis Bank in a Rs 3,500 crore block deal. The bank stock, which has rallied 26% in the last one year, was trading flat following the deal.Global brokerage firm BofA Securities had yesterday issued a term sheet in which Bain Capital entities, Integral Investments South Asia IV were looking to offload 8.35 million shares, while BC Asia Investments VII and BC Asia Investments III fund wanted to sell 14.5 million and 10.5 million shares, respectively.A confirmation of the buyers and sellers could be known in the evening when exchanges release block deal data.The offer price was fixed in the range of Rs 1,071.0 to Rs 1,076.05 per share, representing a modest discount at best to Monday’s closing price of Rs 1,076.05 per share. BofA Securities India is the sole book-runner for the deal.Bain Capital acquired its stake in Axis Bank in November 2017. The private equity firm previously sold a 1.1% stake in the private sector lender through open market transactions in December for about Rs 3,700 crore.Also Read | There are opportunities outside the 'Magnificent 7' stocks in S&P 500: Savita SubramanianIn June, Bain Capital sold a 0.7% stake in Axis Bank at an average price of Rs 968 per share, aggregating Rs 2,178 crore. Prior to this, the private equity firm had sold a 1.2% stake in October 2022.With the proposed sale, Bain Capital will exit the bank completely.Over the last five years, Axis Bank shares have rallied by 43%, compared to a 93% surge in the benchmark Sensex and a 64% rise in the BSE Bankex index.

The NSE Nifty Next 50 Index is emerging as the hottest stock gauge in India, as investors look for pockets of outperformance in a market that’s been hovering near record highs.Earnings growth is proving to be a key metric. Made up of potential candidates for the benchmark Nifty 50, the gauge has seen its forward profit estimates climb 20% so far this year, far outpacing the 3.5% increase for the larger gauge. The Nifty Next’s biggest components feature industrial and materials firms directly benefiting from an economy expected to grow more than 7% in 2024.“The general trend in the market at the moment for foreign investors, and I would say the more savvy ones, is that they are going beyond the Nifty 50,” said Gary Dugan, chief investment officer at the Global CIO Office. “There’s a lot of GDP in that second band of 50 companies beyond the Nifty,” he added. 109149835An eight-year rally in Indian blue chips has driven up valuations and forced global funds to broaden their search for winners in the $4.6 trillion market. At the same time, the rising attraction of equities in China and elsewhere puts more pressure on local firms to deliver growth in earnings and return on investment.The Next 50 measure is expected to deliver earnings growth of 39% over the coming year, according to estimates compiled by Bloomberg. That’s likely to help extend its 65% rally seen over the past year despite the challenges facing the broader market. The gauge just notched its best quarter since 2009 versus the larger benchmark NSE Nifty 50 Index.Global funds have increased allocations to some of the index’s biggest stocks, including communication equipment maker Bharat Electronics Ltd., defense firm Hindustan Aeronautics Ltd. and Canara Bank Ltd., said Rupal Agarwal, Asia quantitative strategist at Sanford C. Bernstein. 109149855While stocks in this second tier gauge are gaining on favorable comparisons with larger peers, they’re also beating out smaller shares. A gauge of Indian small caps has undergone a correction that at one point wiped out more than $80 billion in market value amid concerns on high valuations and the impact of extreme volatility.The Nifty Next “gives foreign investors a good way to participate in the India stories such as manufacturing, railway capex and public sector undertakings without worrying about liquidity,” Bernstein’s Agarwal said.