16441In view of reduced inflation and expenses, will it be right to invest in IT stocks?
Global brokerages including Morgan Stanley, CLSA and Credit Suisse are positive on select largecap stocks from sectors like financials, IT, mining and paints amid the ongoing rally on Dalal Street.
Stocks to buy: Global brokerages including Morgan Stanley, CLSA and Credit Suisse are positive on select largecap stocks from sectors like financials, IT, mining and paints amid the ongoing rally on Dalal Street. The benchmark BSE Sensex has advanced 71% to 50,395 on March 15 from 29,468 on March 31 last year. Likewise, the NSE Nifty index has gained 73% during the same period. Going with market watchers, sustained inflows by foreign institutional investors (FII) and liquidity measures taken by central banks and governments aided D-Street from Covid-19 lows.
Among the sectoral indices on BSE, the Metal index has gained 146% in FY21 so far. The BSE Auto, IT, Realty, Capital Goods, TECk, Power, Bankex and Healthcare indices have advanced between 73%-120% during the same period.
Brokerage firm CLSA is positive on select banking and IT counters. It believes that valuations are still cheap for large banks. Axis Bank, State Bank of India (SBI) and ICICI Bank are among its top picks. It sees a 33-56% upside in these players. CLSA likes Infosys, HCL Technologies and Tech Mahindra in the IT space.
On the other hand, Morgan Stanley likes Asian Paints with a target price of Rs 3,000. It believes that the share price of Asian Paints will rise relative to the country index over the next 60 days. Shares of the company have underperformed the benchmark equity indices in 2021 so far. The scrip has declined nearly 15% YTD, while the Sensex has advanced 5.5%.
“This is a significant underperformance relative to history. The market seems to be wary of increased competition and raw material inflation,” Morgan Stanley said adding Asian Paints is the best placed to see growth rebound in 2021.
The brokerage also prefers IndusInd Bank with a price target of Rs 1,225. Morgan Stanley said that the bank has highlighted sustained macro recovery and expect moderation in credit costs next year.
In the mining space, Credit Suisse maintained an ‘Outperform’ rating on Coal India with a price target of Rs 195. It also expects that the company will maintain a healthy dividend yield. “FY21 EPS rises on the back of higher-than-expected volumes,” Credit Suisse said.