Long & Short of Markets: Metal mania, recovery plays & multibaggers

The second Covid second seems to be on the way out and economy-linked stocks are already seeing investor interests. First of all, metals may see a pick up in demand in the September quarter as the economy recovers from the Covid second wave slump. Secondly, capital sectors such as infra, including metal along with financials are gathering the Street’s attention. Read about strong financials of metal stocks, ITC’s outlook and where to spot multibaggers in this week’s edition of Long & Short of Markets.

Metal triggers. No! It’s not just demand-supply

Metal stocks are facing headwinds following a slump in demand due to the second Covid wave. Market veteran Ajay Srivastava says metals may again see good times in September. One factor makes metals’ outlook shinier and that is a very balanced balance sheet. Srivastava says that after a 10-year long capacity expansion by borrowing, the scenario has changed in the last 4 years as they are going towards zero debt.
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Growth over value?
Trying to spot multibaggers? Dipan Mehta of Elixir Equities says multibaggers can be found in the growth batch and not among the value stocks. Betting on the new age digital businesses, the market veteran says that value businesses grow at or below the GDP growth rate. Dipan Mehta talks about the valuation conundrum of these high growth stocks and how these are going mainstream today in this interview.
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Picture abhi baki hai!
FOMO is one of the dangerous biases while investing, and it was no stranger to investors who missed the rally in chemicals, including the top fund managers of the country. Owing to China’s curbs on polluting factories, ‘China Plus one’ policy of global MNCs and India’s near perfect substitute for Chinese players has boosted a gravity defying rally in Chemicals. But the Street thinks that this rally is not a sprint but a marathon as Indian companies have a long way to go in capturing global market share.
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Cloud of ‘smoke’ clearing over ITC?

ITC’s long slumber can be attributed to its over-reliance on cigarette business. But in the March quarter, ITC’s non-cigarette FMCG saw a higher growth and the hotel business clocked recovery but the star performer was the agribusiness vertical. Going forward, these verticals are expected to drive growth for the stock, but Dalal Street is a divided bunch when it comes to ITC. Analysts have given a muted or optimistic outlook on the stock.
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Recovery play: Financials, capital sector etc.

A Balasubramanian, MD & CEO, Aditya Birla Sun Life AMC, believes that the biggest spenders are the government and by now, people have realised the importance of spending for economic recovery. The biggest push will be seen in infrastructure, he opines while being bullish on the capital sector and financials along with few others. The market veteran also backs financials on stronger balance sheets of the lenders.
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