Jul 20, 2010

Commodity stocks may be weak in the near-term: Gajendra Nagpal

Gajendra Nagpal : As you rightly pointed out, the markets have been so efficient these days that whatever good or bad happens immediately the prices start reflecting the trend. We have been talking of Sesa Goa results today and results are likely to be good but at the time we have heard reports coming in from some of the big FII research outfits that they could underperform going forward.

So its very important for all the discerning investors to keep an eye on all the events that are happening around us. I think the results so far has been very good and we are very hopeful of the results of large cap stocks which would be obviously coming in over next few trading sessions but I do believe that from a medium to long term standpoint, Indian economy is offering you a great opportunity.

While I would not immediately be gung-ho about stocks like sugar and metal because of the news that came over the weekend from the US and also the fact that Chinese economy is slowing down. There could be challenges in the short term for the commodity space but then obviously it's a great opportunity for a country like ours where we are also growing at a fairly strong pace and these commodities are available to us at cheap valuations.

So there could be an advantage for certain domestic companies like L&T or BHEL, which are great consumers of these commodities. As regards banking space, a lot of money which was for 3G auction is going to come back to the economy sooner than later. So there will be lot of money available in the market for corporates so if the economy does well as we believe it will, I think banking stocks are likely to do as well or even better.

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