M&M top auto pick; stack up in capital goods stocks: Amnish Aggarwal
Amnish Aggarwal, Head of Research, Prabhudas Lilladher, says capital goods is perhaps the best performing sector in terms of numbers, because the profit growth of all the capital goods companies and even the order books have been looking quite decent. In the capital goods space, play the entire automation and electrification theme this year. Companies like Siemens, ABB, and to some extent even GE T&D, Schneider stack up there. Among these ABB and Siemens seem to be the largest and very formidable players. The markets may have taken a bit of a breather yesterday after two days of a stupendous rally. The IT sector definitely stood out, hitting record highs. How much further can this rally sustain within IT?
Amnish Aggarwal: As far as the IT sector is concerned, there are two things. First of all, with the US elections getting over, now people are getting more comfortable that the IT spending will likely start and they will get more clarity. Secondly, the kind of fear people had earlier that once the Trump administration comes, there would be much more embargo on H-1B visa and I think that, that is not going to be there. So, there are pockets within IT where there will be stress in some European markets and ER&D is not doing well across segments.
But broadly, given that the valuations today are much more reasonable for frontline IT stocks and the visibility is improving at a very steady pace, IT today represents a segment where the downside is very limited and there is a scope to make steady returns incrementally.
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