Dhiraj Agarwal, co-head of equities at Ambit Capital, on Thursday, said that the market looked a bit risky now. Agarwal also advised avoiding momentum stocks at the moment.
“It’s difficult to predict a correction in these kinds of markets but it is looking a little risky. In fact, the stocks, which have moved up in the last month or two, absolute microcaps, absolute smallcaps and sometimes companies without any strong fundamentals and appealing in terms of earnings or profitability ratios, so, it’s looking a bit risky looking at the nature of the stocks and segments of the market, which have done strongly in the last month or two,” Agarwal said in an interview to CNBC-TV18.
On investment, he said, “My recommendation would be to avoid names, which are going up because of momentum. In the last two months, we have seen the so-called dips resurfacing and stocks actually in the microcap or smallcap space running 50-100 percent within a span of 4-8 weeks’ time. Therefore, just avoid getting trapped into some of those names.”
According to him, utilities and power are making a comeback purely on valuations. “Utilities and power are still struggling; was completely ignored and which is coming back. We have seen many other sectors do the same earlier this year and metals being one prime example, which was completely ignored for 4-5 years and trading below price level and there are still a lot of names in that space, for example; meanwhile, we don't cover utilities, we like OMCs, trading below book and with strong earnings levers coming back,” said Agarwal.
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He further said Ambit Capital keeps favourable view on TVS Motor Company and Eicher Motors. He added that Tata Motors and Ashok Leyland are the top picks of the brokerage in the auto space. The firm is bullish on Titan and Barbeque Nation from the consumption space, he said.
For the entire interview, watch the video