Defense stocks to buy | HAL | BEL: The party may be over for the defense story, but for the long term, here are 2 stocks to bet on: Hemang Jani

A market sector that was active yesterday after a long gap was small, medium or high. NBFC (non-financial financial institutions)Shriram finance of the world. Chola came back after a weak number, as did Sammaan Financial, India’s once bullish real estate sector. Is this sector bottoming out? Fusion or even Credit Grameen showed some spark. Is this sector ripe for stock picking or is it too early to get into NBFCs?
How to breathe: We are seeing good momentum in some of the sectors as you mentioned, whether it is Shriram Transport Funding Or Chola. Indiabulls Housing is a completely different stock. Part of that has to do with the fact that within the banking sector you are seeing some money being diverted from banks to NBFCs and insurance because as we all know banks are struggling with growth on the deposit side. NIMs are under pressure and the sector is underperforming.

So, a portion of that flow is moving towards NBFCs where there are early signs of recovery or comfortable valuation and also towards the insurance sector. We like some of the NBFCs, particularly Chola and Shriram Transport Finance. They are in a strong position and I don’t think there is going to be any problem in terms of growth or NIM per se. Moreover, in the case of Shriram Transport Finance, given their business update on this quarter’s numbers, it looks like there will be decent growth. That is something we like at the moment.

Everyone likes defense and has it. NFOs are out of the question. But then why have these stocks fallen by 15%, 20%, even 25%? Is the party over?
How to breathe: The party lasted for quite a while and was much more exciting than we thought it could be. But now that reality has come down to basics, let’s do the check in terms of the kind of valuation and growth we are seeing. When we look at the numbers that some of the companies have reported, they are not showing that. Except for HAL and Bharat ElectronicsThe numbers were not that good and that is why we are seeing a bit of profit booking.

I think that, as a theme, the party is over. But as an allocation stock, if you want to take a longer-term view, maybe BEL, which is still growing at 30-35%, is not bad. Also HAL, which is growing at a very high rate again. These are the two names we are comfortable with.

A stealthy bull market is underway globally. gold prices. Here, there is an adjustment in the recently announced tax incentive for domestic buyers, but globally, it reached $2500. Yesterday, the shares of gold financiers also became active, which is a kind of indicator of that pocket. Do you like them? What is the play here?
How to breathe: There is some degree of correlation between gold prices and gold financiers. When you look at the numbers, you can only see Muthoot It delivered a good set of numbers. We had some of the other issues that came up with Manappuram. So selectively, as part of the NBFC group, Muthoot is something we like. But I don’t think we can see it as a structural play because there may be a bit of volatility Also in gold prices and growth, but it can be observed selectively. One more point I would like to add on the brokerage shares Is that one of the reasons why we are seeing the action in the brokerage stocks because most of these discount brokers are not charging anything for cash trades now because about two months ago there was a directive that they would have to pass on the incremental profits that they are making, the turnover from the stock market, to the clients? Now, the brokerage firms will also start increasing the brokerage rates for the cash segment and that would benefit a lot of players. Also, we are looking at an M&A deal. Let’s say that Snow flower It has put Nuvama up for sale and that could trigger a re-rating of wealth management firms and brokerage stocks. These are the two reasons we are watching the stock and we think Edelweiss, in terms of the sum of the parts, looks quite attractive. There is a case for a 20-25% re-rating if Nuvama goes ahead.

Any thoughts on housing as a space and GNP In particular?
How to breathe: He’s going through a bit of a rough time. If you look at LIC HousingOver the last two quarters, NIMs have been under pressure and growth is not looking great either, which is quite surprising given the kind of growth we are seeing in new sales of the real estate companies. So that alone won’t create enough incentive for them to hold on to them.

At this point, I’m not too bullish on that sector. I prefer to look for real estate companies where we’re seeing very strong momentum-based growth, because even though valuations have increased, when you look at the actual data points at the base level showing 30-40% growth, it makes more sense to be with them.