Still logical to pick IT stocks selectively: Venugopal Garre

economictimes.indiatimes.com:

«Now, to a large extent all of that holds good even now, nothing much has changed. It is just that valuations have increased quite rapidly,» says Venugopal Garre, MD, Bernstein.We have seen quite a bit of rally from March lows, almost a double-digit rally in Nifty already. Do you see it trending higher or a bit of consolidation is on the cards?Broadly if I look at the way we have been looking at the market, we sort of upgraded the equity view in the first week of April, perhaps that was a time when the market was closer to 17,000 Nifty.

Now since then the increase has been fairly swift and at this juncture we are broadly taking an opinion that we should ideally add from a large cap sense which is a top-down. Nifty index perhaps should consolidate at these levels which is more a time value correction rather than an absolute correction and a part of that thinking is when we upgraded India.

Our thinking was fairly simple that macro has to a large extent bottomed out then and not just the broader macro parameters things like current account deficit outside of that was showing a sort of strength which meant that even from a currency standpoint perhaps it would have been more stable and more importantly broader sluggishness in China which was another variable which we felt would bring in foreign flows into India. Now, to a large extent all of that holds good even now, nothing much has changed.

It is just that valuations have increased quite rapidly. So, what we are saying is that outside of the Nifty index, there would probably still be a broader strength in the market which is the smaller stocks because it is actually quite easy to justify those because they are relatively higher growth in any case so you can play that