What do you make of the recovery in the markets today? At one point, Nifty was down 300 points, but closed 106 points down. Does this once again show the strength of the Indian markets?
Absolutely. We have been seeing this time and again that markets correct a bit and then immediately recovery starts coming at lower levels. This is a very healthy sign for Indian markets. We have seen this getting played out for quite some time. Domestic liquidity has to be complemented for this. We expect this trend to continue in the near future as well. So whenever FII selling or one pocket of the market selling happens at a price below certain level, recovery immediately starts coming. It is a very healthy trend.
Which are the sectors you would bet on now?
IT continues to remain our favourite. We believe that it is going through a multi-year rerating mode. What probably would have happened over a 5-10-year period because of Covid order book and performances, is happening now.
Most IT companies are having the best possible time in their entire career and this is going to continue. IT companies focussed on digital transformation, platforms, R&D, engineering and other innovative work will benefit even longer. Our favourite is . All corrections are opportunities to accumulate some of these shares.
We also like infrastructure and construction, Indian economy-facing stocks. We believe there is going to be a significant amount of public spending by the government over the next 6 to 12 months and that is definitely going to help some of these infrastructure and construction companies. So schemes like housing for all, schemes to build roads, infrastructure and railway stations are going to help. Larsen & Toubro continues to be our big favourite in this space and we believe investors should pick up these kinds of stocks at current levels also.
What would be your favourite as far as the reopen theme is concerned — PVR, multiplexes, hotels and casinos?
I am a little sceptical on the exhibition space. While it is good news that finally they are opening up in places like Maharashtra shortly, that is definitely good news as far as these stocks are concerned. But we will have to wait and watch. There are multiple things which have happened during the last 18 months, including the emergence of OTT in our lives in a very big way.
If I have to play this unlock trade, my first choice would be the hotel stocks, particularly the luxury hotels. This is one place where there is still opportunity to pick up stocks for medium to long term. International travel is going to be allowed soon. Domestic travel has come back. Business travel is also picking up. All this definitely augurs well for companies like Indian Hotels, Chalet Hotels, EIH and the likes. I will be recommending those stocks. Airline stocks also do look promising in unlock trade, but considering the valuation and volatility these stocks have demonstrated over a period of time, I will be a bit cautious at elevated levels.
