7079In view of reduced inflation and expenses, will it be right to invest in IT stocks?

Select stocks in the BSE500 index delivered multi-fold return to small investors amid the ongoing rally on Dalal Street since the beginning of FY21. Data available with Ace Equity showed that at least 40 stocks, in which individual investors held over 15% stake as of December 31, have more than doubled their wealth.

With a rally of 1,252%, cloud communication technology firm Tanla Platforms rallied the most in the list. The scrip jumped to ₹683.55 on February 9 from ₹50.55 on April 1 last year. On the other hand, the benchmark BSE Sensex has gained 103% during the same period. Retail investors held 18.95% stake in the company as of December 31.

According to market watchers, liquidity measures taken by the government and central banks aided the Indian equity market in the recent past. The BSE Midcap and Smallcap indices too gained 90% and 82%, respectively, during the same period.

Sharing his thoughts on the ongoing bull run on Dalal Street, Siddhartha Khemka, Senior Vice President, Head-Retail Research, Motilal Oswal Financial Services said that the confluence of economic recovery, containment of Covid-19, earnings beat, and an expansionary budget has kept the market in good spirits.

Data further highlighted that Laurus Labs, Aarti Drugs, Alok Industries, NCC, Tata Elxsi, Suven Pharmaceuticals, Alkyl Amines Chemicals and IOL Chemicals have also gained over 300% since the beginning of the ongoing financial years.

Brokerage Anand Rathi Shares and Stock Brokers is bullish on Laurus Labs with a price target of Rs 424. “With the continuity of robust growth across segments, we expect the growth momentum to continue in the medium to long term. Hence, we maintain our Buy rating on Laurus Labs,” it said in a report.

Khemka is bullish on stocks from across the sectors. “With the budget behind now, the focus will be back on corporate earnings, which are witnessing solid momentum, with a broad-based beat and upgrades. Cyclicals are driving earnings at the margin and with a capex boost in the budget, it could continue to remain in favour in the near term. From the broader market, we like ideas such as Indian Energy Exchange, Varun Beverages, AU Small Finance Bank, Crompton Consumer, L&T Technology and JK Cement,” he said.

Larsen & Toubro, HEG, SpiceJet, Tata Chemicals, Rain Industries, Deepak Nitrite, Gujarat Narmada Valley, The Federal Bank, Tata Coffee, Sundaram Fasteners and NBCC stood among other players which have jumped between 100%-150% in the ongoing financial year.

B&K Securities prefers L&T with a price target of ₹1,611. However, it believes that the stock will remain range-bound in the near-term due to slower than expected ramp-up in execution.

Elara Capital sees opportunity in BFSI sector considering the government focus on divestment. “We believe a continuing focus on disinvestment will provide fiscal cushion and reaffirm the government’s reforms agenda and provide a key support to the markets, while reforms in the banking space, especially relating disinvestment of two public sector banks, will trigger a near-term narrative in favour of BFSI as a sector.”