Infosys results won't swing mkt either way: PN Vijay

Portfolio Manager, PN Vijay doesn’t think Infosys would swing the market either way; if the guidance is bad, it may take it down, but not the other way because the focus now is on the old economy stocks, quick question marks about IIP growth, about inflation. So nobody is looking at IT as a great market driver at this point in time.

Excerpts from CNBC-TV18's exclusive interview with PN Vijay:

Q: How sanguine are you feeling about technology and how much good do you think a strong guidance from Infosys can do for the market itself?

A: It has to be very strong because even today if one looks at Infosys growth it is lower than the PE; PE is around 16 or so, so the peg is above 1 and this is a worry for a growth oriented sector like the IT sector.

I don’t think Infosys would swing the market either way; if the guidance is bad it may take it down but not the other way because the focus now is on the old economy stocks, quick question marks about IIP growth, about inflation. So I don’t think anybody is looking at IT as a great market driver at this point in time.

Q: What’s going on with telecom another leg of weakness in stocks like Bharti Airtel. How did you read the recent news and how would you position yourself in that sector now?

A: Telecom looks good to me. Finance Ministry’s circular these things keeps happening in government; Finance Ministry is always the synch putting out ideas to increase revenues for the government but most of the time it doesn’t past muster because realistic considerations stick over in a democracy like ours. So I think markets got spooked a bit when Finance Ministry quoted American sources and said that one will have to auction the power tender with retrospective effect, the spectrum and huge amount of money were talked about. But the growth is fantastic; I think the mobile addition in India is the highest than in China; we are going to have more mobile phones than the US in about year’s time. So there is absolutely no problem about growth in that sector and it’s a good sector to be in. I am overweight on that sector.   

Q: The first signs of a bit of buying in power and allied power stories yesterday. Do you think interest is coming back and would you start looking at any pocket of that yet?

A: Yes, last few days one has seen some buying across the board especially in blue chips like Siemens, ABB which have got beaten down in fact smashed down last four-five months. I think the valuations are attractive but the companies are always good. I think key turnaround macro story would be probably today because we had strong core sector numbers coming out last week; core sector growth of 8.2% as compared to 5.3% in January. If that’s followed by a good IIP number, I think capital goods will take off. We need that big macro number to show that India’s capital goods story is still in place then I can see power outperforming next few months.  

Disclosure:

It is safe to assume that my clients & I may have an interest in the stocks/sectors discussed