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Kunj Bansal on why a two-player market may be bad for Bharti Airtel

After a sharp 10-11% movement in 30 odd trading sessions, it is alright if the market tops out. If it corrects I will be happier because that will give an opportunity for more money to come in, says Kunj Bansal, CIO, Karvy Capital.

What are you making of the market temperament? Monthly inflows into SIPs have been extremely strong as per the AMFI data. Do you find opportunities to invest here?
In August, Nifty had moved up around 9% and that was followed by another 2.5-3% movement last week which included three days of September. So if this week has been flat there is no surprise. After a sharp 10-11% movement in 30 odd trading sessions, it is alright if the market tops out. If it corrects I will be happier because that will give an opportunity for more money to come in.

Obviously with every rising, a whole set of under-participated stocks have come into focus. Along with that, as you mentioned, today the news has come of the highest participation by investors in August. That is good news for all the listed and even unlisted mutual funds. Although one can keep arguing about valuations, CAMS will be a better pick. So whether individually one fund house loses or gains market share, at least CAMS is something that will on an average basis keep growing its business.

Additionally the company has also been targeting newer set of services over a period of time. They have been targeting insurance not much successfully but that is a new revenue stream that they can add to. So assuming the market sustains and these kinds of valuations continue to be liked by the market, that is where the opportunity will come.

For those, who have missed out on buying Bharti at lows, would you say that Bharti is a good long term bet and a good buy at current level?
There are two ways to look at it; while most of the market participants think a two-player market will be positive for Bharti, actually that may not turn out to be so because in that case there will be only two players and Jio is backed by a much bigger financial powerhouse. At least now there are three players and so two of them together can go to the government and the government can also be more considerate. It will be better if it continues to have at least three players. That will be good for both Bharti and Vodafone.

Having said that, coming to the market the view on the stock, those who feel left out, if they are taking a short term call, it might be too risky because the stock has moved up sharply in the last few days, especially after the announcement of rights issue and subsequent management call and commentary by Mr Mittal on his growth plans.

But yes, given the way the company will be building up its war chest by way of rights issue, given the way the growth plans have been outlined, given the way the market remains a two-player or at most three-player one, ultimately the services prices have to go up and that will benefit the long term investor. So in the long term, it can be a good bet but in the short term, one will have to be cautious if the market comes down and if the stock has moved up sharply.

There is so much excitement when it comes to after they announced the appointment of Sanjeev Barnwal as CEO. The market is giving it a thumbs up?
Obviously after such an uncertainty, any movement towards certainty is taken positively by the market. Of course, over a period of time, it will depend on how things shape up for the business on an ongoing basis and how the new person is able to raise the management team and is able to bring back business in terms of stability and asset quality which seemed to have become an issue for Ujjivan.

So all those things will be dependent but the market always gives short term reactions both on the negative side (as we saw when Nitin Chugh exited) and on the positive side when we are seeing an announcement of somebody being appointed. One will have to wait for sustainable performance from the bank.

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