IT services space is a good bet, says Alroy Lobo, Chief Strategist & Global Head- Equity Asset Management, Kotak AMC.
Lobo told CNBC-TV18, “We are still very constructive on the outsourcing theme both in terms of IT services and pharmaceuticals, we think that the nervousness that investors are showing on the IT services sector is normally seen during the March period because companies are coming closer to guidance and Q4 is normally relatively soft quarter. So I think that sector is showing very strong visibility in terms of revenue growth for FY12 and potential for significant earnings downgrade in that sector looks remote. So I think IT services is definitely one sector we would bet on.”
He further added, “Pharmaceuticals is another sector, which we believe will do reasonably well, there seems to be fair good degree of visibility also in the sector and valuation in the sector also seems to have corrected.”
“Another sector which I believe we are currently neutral on that sector is the banking sector, a lot of the concerns in terms of rate pressures have now been priced into the stocks, it appears that liquidity will ease going forward and some of the cost pressures they were facing in terms of deposit cost are now being gradually transmitted into lending rates and that would enable them to protect some of the net interest margins. So that is another sector purely because valuations have corrected, looks promising going forward.”
“At this point in time from a negative stand point, we would be still underweight infrastructure, we need to see far more powerful triggers and catalysts in terms of companies coming closer to execution, companies coming closer to cash flow generation, companies coming closer to declaration of dividends and unless you see those triggers in place, it looks very unlikely to see a very significant change in investor interest on the sector.”
“We are still underweight on real estate despite deep value in the sector that is another sector we would basically stay away from, I would be very selective in picking out stocks in that sector. At this point in time, also capital goods – we would be relatively underweight, we are very selective as to which companies we should be focused on. Consumption is a sector which we will be positive on, we see potential for companies with pricing power, ability to manage cost pressures and volume growth going forward as a companies to bet on.”
Source:http://www.moneycontrol.com/news/stocks-views/it-services-spacegood-bet-kotak-amc_531412.html
