Are cap goods stocks the new FMCG? Tandon answers

Synopsis “IT is now a market performer if not marginal outperformer for many of the frontline companies. Overall, the earnings season has been particularly good in terms of surprises on the upside. In fact, downgrades were reasonably large and merit attention.

One has to keep focus on the sectors where growth is expected and that will keep banks among the large ones. ” ETMarkets. com Related What can be the next triggers for Reliance and HDFC Bank? Daljeet Singh Kohli answers Top up in IT, capital goods, auto and PSUs; rest is an avoid: Gautam Shah “The only dilemma right now among the large sectors has been in terms of technology, whether you want to be bullish on it because of the fact that the US is cutting back and consequently there may be some more offshoring.

On the other hand, there is the fact that the overall macro for IT remains weak in terms of budgets,” says independent analyst Anand Tandon . It seems like Reliance is doing all the heavy lifting, holding up over 2% now on the futures. Fundamentally what triggers would you hope to see? Reliance has multiple triggers but clearly telecom is one of the areas where I expect Bharti more than Reliance, but both to benefit as the 5G rollout goes out.

The fact is Vodafone continues to not do particularly well and so the market share of the two majors will continue to grow. Also, from their traditional businesses they have not been doing badly and we do expect retail and the other parts of the business for Reliance to do overall quite well. It has been somewhat of an underperformer and therefore I would expect Reliance to catch up.

We are at the end of the earnings season. Is there any stock idea or sector that has come to the forefront on account of it? What really stood out for you? By and large, the earnings were in line with what people expected in terms of the sector. I am not talking about individual stocks .

Obviously, cement did not perhaps excite as much as people were expecting, on the other hand capital goods clearly has done perhaps a little better than what could be expected. Banks are pretty much in line or better and therefore remains one of the heavyweight sectors that will have to work throughout the year in terms of earnings for the index to move up. The only dilemma right now really among the large sectors has been in terms of technology, whether you want to be bullish on it because of the fact that the US is cutting back and consequently there may be some more offshoring or on the other hand the fact that the overall macro for IT remains weak in terms of budgets.

Has IT corrected enough and therefore offers an opportunity? To my mind, it is now a market performer if not marginal outperformer for many of the frontline companies. Overall, the earnings season has been particularly good in terms of surprises on the upside. In fact, I would think downgrades were reasonably large and merit attention.

You have to keep your focus on the sectors where growth is expected and that will remain banks among the large ones. MORE STORIES FOR YOU ✕ What can be the next triggers for Reliance and HDFC Bank? Daljeet Singh Kohli answers Top up in IT, capital goods, auto and PSUs; rest is an avoid: Gautam Shah « Back to recommendation stories I don’t want to see these stories because They are not relevant to me They disrupt the reading flow Others SUBMIT Consumer stocks will continue to do reasonably okay. Some of the new tech is beginning to look a little more interesting, but I think it still remains somewhat expensive.

If they correct enough, then again you may have some opportunities there. I think one of the biggest sectors which did not do well at all has been the chemicals so one has to see if there are some surprises that may come up later in the year from those sectors. We were debating whether the capital goods stocks are also becoming the new FMCG given the kind of rich valuations that they are quoting at.

Can someone who has completely missed out on the rally in cap goods, still jump in even at these valuations? There is no particular segment of the market which looks cheap per se but that said for capital goods companies, the order books they have reported are fairly robust for most companies and it does look like the capex cycle is translating into more orders for the suppliers. As a consequence, if you choose your sectors reasonably well, you are looking at profits which will continue to grow from here on. The kind of capex railways has announced is unprecedented and if it has to actually materialise, that will lead to many companies finding multi-year kind of increases in their order books.

Do you want to buy them at 60 PE? So long as there is a strong earnings momentum, going forward what is likely to happen is if the valuations are too much, you will get a little less than the earnings growth but you will still not lose money; if the valuations are adequate when you enter, you will at least get the earnings growth fully. So in either way, a market which is otherwise a little more iffy and volatile, here is a place where you could perhaps get in and protect and if not marginally grow your money. Don’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp.

click here! Thursday, 16 Feb, 2023 Experience Your Economic Times Newspaper, The Digital Way! Read Complete Print Edition » Front Page Pure Politics ET Markets Smart Investing More RBI Okays Licences for 32 Payment Aggregators Payment arms of US technology majors Amazon and Google, along with Reliance Payment Solutions that is part of Reliance Jio Infocomm, were among the 32 firms given in-principle approval from the Reserve Bank of India (RBI) on Wednesday to operate as online payment aggregators. ET GBS to See Exchange of Powerful Ideas The next two days will see the return of the country’s foremost ideas forum, bringing together thought leaders and innovators from the world of politics, business, economy and entrepreneurship. Read More News on stocks to buy anand tandon reliance capital goods stocks fmcg stocks Stocks expert view Stock Market et now reliance (What’s moving Sensex and Nifty Track latest market news , stock tips and expert advice on ETMarkets .

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