Apurva Sheth of Samco Securities
“Improving asset quality, lower provisioning and better capital adequacy in the banking sector will increase the profitability of the sector, taking the sectoral index beyond the 45,000 level in the next two quarters,” Apurva Sheth of Samco Securities has said in an interview to Moneycontrol.
He also says Samco Securities has been bullish on IT sector stocks for almost two months, and there are early signs that attrition in the sector has peaked.
Entry at the current level in top-rung IT stocks may reward investors handsomely, Sheth, with a research experience of more than a decade in the Indian stock market, believes. Edited excerpts of the interview:
Do you expect the rally to continue in the PSU banking space after a significant run-up in the recent past?
Public sector banks (PSBs) have performed better on certain aspects compared to their private sector peers. Conscious corporate lending practices and reduction of corporate slippages compared to private banks have given an edge to PSBs.
Also, cleaner balance sheets and increased demand for lending will see the rally continuing.
Do you think the Nifty Bank can move beyond the 45,000-mark by the end of this financial year?
In addition to the factors mentioned above, improving asset quality, lower provisioning and better capital adequacy will increase the profitability of the banking sector, taking the Nifty Bank beyond the 45,000-level in the next two quarters.
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As per technical charts, do you think the Nifty50 will find it difficult to surpass its record highs soon?
No, it should not be difficult at all for the Nifty to regain the peak sooner. Prices have given a break-out on a broader time frame and the current oscillators and indicators are showing a strong uptrend by the end of FY23.
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The Nifty FMCG index has seen a good uptrend since June followed by a consolidation in the last month. Do you think the rally will resume and will take the index towards 50,000?
As the name suggests, the index houses FMCG stocks, which are considered defensive bets. As the benchmark indices are about to peak, the consolidation may continue for some more time in the Nifty FMCG index but the long-term story remains intact for Nifty FMCG.
Crude oil is the key raw material in the production of health care and skin care products. With crude oil prices expected to ease in the coming days/months, the uptrend in Nifty FMCG may coincide with a consolidation in the benchmark indices.
Do you see any sign of a sharp uptrend in the Nifty IT index in the coming months?
We have been bullish on the IT sector stocks for almost two months. There are early signs that attrition in the IT sector has peaked out. New hirings across companies/sectors have begun and margins have started expanding gradually. The recent beating-down of IT sector stocks have made valuations compelling. Entry at the current level in the top-rung IT stocks may reward investors handsomely, going ahead.
What is your take on tyre stocks that have given decent returns in the last month?
Prices of the key raw material, rubber, have gone down, and that is keeping cost under control. Overall demand has been good, and it is expected to remain so.
The recent festival sales in October, across segments, were the highest. The tension gripping international crude oil prices has eased significantly, indicating lower retail prices ahead. This has also aided the sentiment for tyre stocks.
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