The Impact of Changing CD Norms on IDFC Bank and Alternative Investment Options
Sanjiv Bhasin, Director at IIFL Securities, believes that the changing credit deposit (CD) norms will have a significant impact on certain banks, particularly IDFC Bank. As the credit deposit ratios need to be brought below 75, IDFC Bank’s net interest margins (NIMs) could be affected by at least 75 basis points. Additionally, there are merger talks that could negatively impact the bank in the short term. Bhasin suggests considering alternative investment options such as DCB Bank and SW Solar, which he believes have the potential to double in value by 2024.
The Run-up in Oil Marketing Companies and Potential Profit-taking Opportunities
Bhasin discusses the significant run-up in oil marketing companies (OMCs) like HPCL, IOCL, and BPCL. This surge in stock prices can be attributed to the double benefit of lower crude prices and a favorable rupee trade. However, Bhasin warns of potential volatility due to price cuts and political pressure. While he believes that HPCL and IOCL still have room for growth, he advises investors to wait for declines or consider investing in mutual funds or the CPSE ETF which includes OMCs as constituents.
Defence and Railway Stocks: Caution and Opportunities
Bhasin highlights the tremendous returns seen by defence and railway stocks. While he expects these sectors to continue performing well, he cautions against expecting similar levels of growth as they have already experienced. He advises investors to wait for opportunities or consider investing through SIPs or mutual funds that focus on these sectors.
Top Recommendations for Auto Pack and Metals
Bhasin recommends Maruti as a top pick in the auto sector, with Ashok Leyland being a dark horse play due to the rise in bus demand. He is also bullish on Hero and Bajaj Auto, with Bosch as the top OEM play. In the metals sector, he believes NALCO will be a star performer due to its capex plans and rising prices of aluminium, bauxite, and iron ore. Tata Steel and Hindalco are also expected to outperform.
Reflecting on India’s Successful Year and Financialisation of Savings
Bhasin acknowledges that 2023 has been a remarkable year for various markets and India’s global stature. He credits the retail investor for driving the growth in the mutual fund industry and believes that financialisation of savings will continue to be a significant theme in the coming years.
Potential Doublers for 2024: SW Solar and DCB Bank
Bhasin names SW Solar and DCB Bank as his top picks for 2024. He expects SW Solar, a solar energy company, to experience significant growth based on its order book from Nigeria’s business. As for DCB Bank, he believes it is an attractive stock with excellent net interest income and a low price-to-book ratio. Bhasin advises investors to consider converting their investments from IDFC Bank into DCB Bank.
The Theme for 2024: Largecaps Regaining Momentum
Bhasin predicts that largecap stocks will regain momentum in 2024, particularly in the financial sector, EVs, and solar energy. He suggests focusing on select banks and EV players in the auto sector. While midcaps have performed well, Bhasin expects some plateauing in that segment and recommends putting more money into Nifty rather than midcaps.
Hot Take: Reflecting on India’s Achievements and Opportunities
Sanjiv Bhasin emphasizes the achievements of India in various fields, including sports and finance. He praises the performance of Indian athletes and credits the retail investor for driving the growth in the mutual fund industry. Bhasin believes that the financialisation of savings will continue to be a prominent theme in the coming years, offering opportunities for investors.
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