Market Guru in talk with RJ Salil Acharya of Radio City: Look at the stocks whose raw material costs will not increase amid a surge in commodity prices

I was bullish on sugar, am bullish and will continue to be the same, says Anil Singhvi, Managing Editor, Zee Business. During a candid radio podcast, 'Kadak Currency’, with RJ Salil Acharya, Radio City, 91.1 FM, Mumbai, Mr Singhvi said While buying keep in mind the names of the companies whose raw material costs are not likely to increase from anywhere and commodities do not matter much to it, just have to buy on them.

WATCH | Click on Zee Business Live TV Streaming Below:

RJ Salil at the start of the podcast, 'Kadak Currency' said people are fearing for the first time since March 2020 when the market collapsed. Now, they are a bit confused and are also fearing the renewed ongoing Russia-Ukraine war. At the same time, unemployment rates are increasing and rates are expected to increase in the US. People are fearing and unable to understand what should be done. Have the situation worsened now or what is happening? To which Mr Singhvi said, have you heard Hrithik Roshan's song Idhar Chala Main Udhar Chala, Jane Kaha Main Kidhar Chal, ( walked in this direction, Walked in that Direction, God Knows where did I Go), the same is happening. Actually, The market itself does not know where I am going, at times slightly up and at times slightly down. Thus the macro factors like high inflation and increasing interest rates, are not allowing the market to go up a lot while the liquidity and people have money in their pockets and they are ready to invest at lower levels, so, it doesn't fall a lot. So, the market is in a dicey range in which by the time you think about the market is at a buzz, it falls and by the time you think that it is falling, it recovers. The same will continue for some more time. The issue is that instead of having a look at the index you will have to focus on the stocks as there are certain sectors and stocks that will run while there are few sectors and stocks where it will be difficult to make money. So the stock-specific approach is necessary for this market.

In his next query of the Podcast, RJ Salil said, there was news related to the merger of HDFC into HDFC Bank, which pushed the market a lot and HDFC, a strong heavyweight in the industry, ran a lot but then fell a lot. So, people were asking that is it similar to an IPO that grew significantly and continued to fall. Please end the confusion and let people know what happens when a merger happens and is it good news or bad news? Mr. Singhvi said, the report is 100% good. It took many years - around 30-40 years - to become such an institutional company. But the problem is with us that we want to make money in 30-40 hours and that too after the news is out. So, the short term investors thought that it is great news, it is great news, but the merger process will be completed in the next year or some more time, thus its results and impact will come after some time. At the same time, when the two stocks, HDFC and HDFC Bank, will surge 15% each in a day then profit booking will occur, which is troubling people but don't panic. Money will not be created in a while but if you are confident then you will make money in both of these stocks. HDFC is the name of trust and if you will have faith in it and a vision and have a long term vision then believe me that you have bought a 24 carat Gold and there is no adulteration. So do not fear.

In his next question, RJ Salil asked, power and sugar stocks, earlier you termed ethanol stocks, have been at a buzz for a long time. So, when it comes to stock-specific sectors than are there the only two sectors where we can focus? To which Mr Singhvi said, 100%, I was bullish on sugar, am bullish and will continue to be the same. There is a buzz in it. Paper stocks are looking strong. In addition, fertilizer shares are also strong. These are the small sectors which are in a buzz. You can compete with the food inflation by buying some good stocks like sugar sector shares, and coffee and tea shares, so that if there is a price increase then whatever is being bought from the market will be compensated a bit. In addition, the textile stocks are looking strong. So, the small sectors, where the earnings of the companies are likely to be strong should be focused upon. However, one thing should be kept in mind that the result season is going to give sudden shocks this time as we don't know which company's result will be bad this time because the raw material cost of several companies has increased and it is hard to analyse the way the prices have increased for which company. While buying keep in mind the companies whose raw material costs are not likely to increase and who are not impacted a lot due to commodity prices. Or buy the shares of agri-commodities and the small commodities where there is a buzz.

To RJ Salil said, big decisions are being made in the US, the inflation rate is quite high and unemployment is also increasing and there are talks to increase the rates. This is why the market is a bit afraid. Will this have a direct impact on India? Mr Singhvi said, it will have a direct as well as indirect impact and there is no doubt about it. The way they allocated the money to the system from March 2020 when the COVID outbreak occurred is being withdrawn gradually by the Federal Reserve of the country and it is tightening the liquidity, Inflation stands around 7.50-8%, which is at the 40 years high in the US - it is usual rates in our country. It is a country that never sees inflation beyond 2-2.50% then such an 8% rate of inflation will get people worried. So, the situation is a bit difficult in the US. Even we are facing inflation and there are signals that it will increase further, which means, we will have to be a bit careful for a certain period. Thus, the macro factors will not allow you to be bullish so it is a time when you should focus only and only on the stocks which are not impacted by these events. Thus you will have to be selective as the market will not allow you to make money at an ease this year. We saw a one-sided market in 2020 and 2021, when it fell then it was one-sided and when increased it was one-sided. Now, it is a time when the market will neither increase being one-sided nor fall being one-sided. So, if you have such a skill, it is good, if not, sit silently after putting your money in good mutual funds.