Rahul Shah analyzes the market performance post Q3 earnings, highlighting the success of largecap IT stocks like TCS and Wipro. He suggests investments in power sector stocks NTPC, PFC, and REC. Auto sector, especially two-wheelers, shows promising growth. Shah says: We still expect the momentum to continue in the two-wheeler spaces going forward and I would remain invested in this two-wheeler theme."
Many times, the street tends to make a bucket of stocks and a narrative gets created that that these stocks have similar characteristics and hence they tend to move in a similar direction. While this might be correct for some time, but over a period of time, especially when there are headwinds, some companies either diversify into new areas or for any other reason, while the mother set of characteristics remain the same, they become different from each other. Let s take the case of mega cap or the top five IT companies, while the narrative is that they are all the same, the fact is the stock of HCL tech is much higher than what it has formed in the last quarter of 2021 which was the time when all other mega cap IT stocks touched a new high. Essentially, even the companies which look very similar could be very different, in business and their stock performance could also be very different.
“These last two years, especially the last six to seven quarters, have been PSU banks. The numbers have been better and what the management has guided, most of the banks have delivered that way.”
Even as the Nifty IT index has marginally underperformed the broader Nifty50 on three, six and 12-month basis, the midcap and smallcap IT stocks have outrun all indices, Nuvama said, adding that some quality tier-2 IT firms delivered "eye-popping returns".
“I look at everything from wheels to braking systems to vehicle interiors, sensors, air conditioning and other stuff which are going to be quite operative in both kinds of vehicle zones. Focus on those kinds of companies where there is no perceived threat to the business basically.”