Three midcap private bank stocks Sanjiv Bhasin is bullish on

Bharti, JSW Steel and State Bank would be my three top picks in the Nifty stocks, says Director, IIFL Securities.What is your current market view and what are you telling your clients to do?We have had a superb three months and we have no complaints. It was about time we saw some profit booking but we are still staying the course. We have created some hedge positions. We are playing both sides of the market but right now it is the time for banks to shine. We think this is the time to go whole hog or overweight on banks and we think banks or financial services companies are going to do extremely well. So it will be a mixed bag from here on. Banks and metals will outshine from here. Portion of IT is also there but we are staying put. We are not giving in. We know there will be 100-200 points correction or maybe a little more but we are geared up for 11,000 and it is not the 11,000 on the Nifty which is actually the real icing on the cake. It is the broader market outperformance. Select PSU banks, midcap banks, Bandhan Bank; there are a whole host of stocks which are now gearing up and that is where we want to put our money.Why are stocks like BHEL, SAIL and some of the PSU old guard coming back? We know fundamentally some of these companies will struggle for the next three-four quarters. So why are they making a comeback?It tells you three years of underperformance or sheer valuation of the broader market is now turned into a bull market. In fact after January 2018, the biggest bear market was in the broader market which bottomed out in March 2020 when Covid happened. And now you are seeing a huge upside. So BHEL, BEL, IDBI, Tata Power are all the beaten down names where there is extreme value. So the sectors which were always the most hated are now rebounding. Of course, as a disclosure we played that market well but we still think there is upside potential there and the broader market will outperform. Now it is again a question of whether you participate or not. You cannot run with the hares and hunt with the hounds. You will keep waiting for 8,000 and something like that may or may not happen but you are missing out the woods for the trees. We think the market is in a catch-22 situation where the breadth of the market or the quality of stocks is always going to be circumspect but that is the beauty of the market. The broader market will outperform. It is in a huge bull market and the next two years belong to them.You mentioned Bandhan Bank. What else would be on your list? On one hand we have got this mass fundraising that is going on with some of the bigger players and on the other hand, a lot of momentum is building up in some of the smaller names.Correct and the opportunity was there about a month back when these stocks were languishing and everyone had written the obituary for banks on moratorium and so on. Look at Bajaj Finance. It has gone up from Rs 1,850 to Rs 3,250 in less than a month. So it is telling us that all this moratorium worry was overdone. There is not so much pressure. So Bandhan Bank , RBL Bank, IndusInd Bank are three of the marquee names which we think have a potential but let us not forget the father of them all: State Bank of India. At Rs 190, it is giving you the opportunity of a lifetime. So right now, my top pick over here would be State Bank. If you are a bit of a risk taker, then Canara Bank at Rs 105 is giving you an opportunity. So it is Bandhan, RBL and IndusInd on the midcap private banks side and State Bank and Canara Bank on the PSU side where even at these prices we are relatively bullish.Do you think Bajaj Finance irrespective of the run up that it saw from the March lows merits a buy at the current levels of Rs 3,190?We are not chasing Bajaj Finance at this price. There was a level at Rs 1,850-2,000 where we did a SIP for 12 weeks and that has played out handsomely. We will again wait for some more decline because we would rather pay some of the other smaller NBFCs. We put our money on M&M Finance closer to Rs 170. We like LIC Housing at Rs 265. They have raised money at 6% and below and we want to be with HDFC rather than Bajaj Finance at these prices. So Bajaj Finance for us at this price would not be a recommendation. We would wait for decline but this is an institutional favourite. As you see, both institutions on the sell side and the buy side have made their killings. So at Rs 1,800, the bears had had their way and the bulls had all their way too. So I do not rule out Rs 3,500 coming but we are not chasing Bajaj Finance at these prices.We have not touched upon the action in metals. I am not sure which side of the fence you are on when it comes to some of these commodity names but the steel majors were on fire yesterday.Correct. We have an overweight and our top pick there would be JSW Steel. It is the best integrated play. China import ban will be another silver lining given that atmanirbharta and make in India will gather steam and there will be a huge demand. You have already seen that in the price of SAIL. You have seen Tata Steel and I think it is about time now. JSW is the best integrated play which is available in India and it will be one of the biggest beneficiaries. Also Vedanta will be an added gainer on the ferrous side and Hindalco. But metals are in a very sweet spot given that the dollar has hit a three-month low. Three large names which will outperform will be State Bank of India and JSW Steel in the Nifty and the third would be Bharti. Today’s headline tells us that in the last two months, Vodafone is losing market share subscriber base and that is all coming to Bharti becoming the numero uno. So I think if you are not content to play Reliance at Rs 1,800, Bharti at Rs 560 gives you a very good view. So Bharti, JSW Steel and State Bank would be my three top picks in the Nifty stocks.