Stay away from textile sector: N Shah

Nilesh Shah, Deputy MD, ICICI Prudential AMC is of the view that one should stay away from textile sector.

Shah told CNBC-TV18, "Textile is easier to take a call, stay away from that, one the rupee depreciation on a temporary basis is not going to materially impact the profitability of this company. Second the kind of margin which they are operating upon and a slight movement in currency here or there takes away a lot of their margins and third, as of today we really don’t see too much of business potential in the textile sector which is reeling under the onslaught of currencies and the other cost pressures notably among power, wage and salaries. IT is a bit of a difficult thing because one it has run up substantially except for today’s correction. Second the valuations which are at the discount to market were in line with the market and third, their majority of the end customers like the banking and the financial service sector in the US, they are still not out of the woods, they probably have a lot of things to do, before they can spend time and money on IT budgets, so still it’s a slightly tricky kind of a situation and as a fund manager I would rather be underweight on the textile sector and neutral on IT sector in this kind of an environment."