Banking, real estate, infra stocks likely to perform well this year, IT may be under pressure- Siddharth Oberoi
时间:2024-06-26 16:23:18 阅读(143)
The Indian equity market has remained range-bound this year so far, with the benchmark NSE Nifty 50 trading in a consolidated range of 18200-18400. The recent developments, such as US debt ceiling negotiations and the Federal Reserve interest rate decision have further dented investors’ sentiment. As the earning season continues to impact market mood, some specific sectors such as banking, real estate and infrastructure are expected to do well in the next few months, while IT may remain under pressure, Siddharth Oberoi, Director, Prudent Equity told Shaleen Agrawal and Yash Sadhak Shrivastava in an interview.What’s the near-term outlook for NSE Nifty 50?
Post-COVID the valuations were low and a lot of money floated that made a lot of stocks pretty fully valued or in the overvalued territory. There was hardly any growth last year and around 18 months of waiting time. The numbers that are coming out, except for IT, the rest of the sectors are performing very well. So, one can easily expect 10-15% earnings growth in the Nifty constituents.
The index is totally percentage weighted so as the other sectors take over from IT, those will start to get more weightage. A lot of infrastructure companies and banking stocks will be in focus now. And as the money moves in there, the weightage increases and therefore the lag takes into account. So, the index adjusts itself accordingly.
Are a lot of good earnings coming in this season now?Yes, in the last quarter, there were a lot of commodity-based hits on the P&Ls. That got normalised. Even China, which had shut down due to COVID, opened up. So, in the textile sector, for example, cotton prices have come down a lot. In a lot of companies, this commodity price escalation has now normalised. So, that will start to come in the books. There will be improved margins. Companies which are India-centric are expected to do very well.
What’s the outlook on the banking sector?I am quite bullish on private-sector banks. During the COVID time, a lot of excess provisioning was done and it was shown that provisioning was no more required. The NPA write-offs are now getting written back as well. The 10-year bond is now even lower than last quarter. So this will actually percolate down to the earnings going forward. Overall, the banking sector will do very well and the momentum will continue for the next two, three quarters.
Which sectors can help investors beat the Nifty 50?Banking is one, second is infrastructure, a very neglected sector till now. But in the last six months, the order book flow in these companies on aggregate is the highest in the last decade. The order book of any of these infrastructure companies is booked for the next three years. And because the elections are next year, the government’s capex is expected to pick up even more. Even in the railway sector, there are a lot of orders from Vande Bharat, etc. Those are also going to help the railway sector as well. The complete order books are really full for the next three years. If these companies grow at 20-25%, they still may not be able to fulfil those orders. So I am bullish on real estate, infrastructure and the banking sector.
What’s the outlook on the real estate sector?Real estate companies are doing very well. The real estate market is divided into residential and commercial. The residential is doing very well but in commercial there’s a lot of unsold inventory. So instead of buying a property, investors can invest in real estate equity because they can then make a basket of four or five stocks.
What’s the outlook on the IT sector?IT is a very US-centric business and there are a lot of mid-sector banks in the US which are in trouble. And in India also, all these companies which are catering to those had a lot of mid-banks as their clients. So, right now, increasing IT spending for them, for those banks is very difficult. There are a lot of layoffs going on in the US. So, there will be a lot of pressure on the IT stocks.
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