FIIs to focus on Infy now; hold realty stocks: PN Vijay

After Infosys saw the return of its co-founder, Narayana Murthy in an executive role, PN Vijay, portfolio manager, askpnvijay.com is anticipating some speculative buying in the stock. "Murthy's vision and practicality will help steer the IT major from its weak earnings, attrition rate, etc," he said in an interview to CNBC-TV18.

He believes that the management change at Infosys would cheer foreign institutional investors as they tend to give more weightage to a company’s management unlike domestic investors. Meanwhile, Vijay is advising investors to hold on to their realty stocks until June's monetary policy plays out. However, one must stay away from adding fresh rpositions in the sector now.
Also read: Murthy's return won't work like magic wand for Infy says Kiran Mazumdar Shaw

Below is the edited transcript of Vijay's interview to CNBC-TV18.
Q: A word on Infosys and how you would approach it this morning? A: Infosys would see some more speculative buying in a bad market. On Friday, Infosys was one of the firm counters. This is a very earth shaking news in a way. Narayana Murthy had moved on in life, some people were even talking about him entering politics and now he is back as an executive chairman. That means he is going to be working from 9am to 5 pm and to help him he is getting his son also on board to manage the nitty gritties. Of course Infosys has been a badly battered stock in the last three years, Tata Consultancy Services (TCS) and HCL Technologies have almost doubled whereas Infosys has gone down 5-10 percent and it lost its pivotal position to Cognizant as India's number one software company. It is all a bit shocking and if one sees the attrition rate in Infosys, it was the highest in last 12 quarters- 19 percent. Even in the job market people are losing confidence in Infosys. It has got a job cutout but since he created and sustained Infosys for so long and since he is a visionary with a practical head, I am expecting quite a lot from Infosys. So, surely this is probably a case of Infosys bottoming out from this level. Q: The big disappointment in couple of Bangalore episodes is real estate, the numbers have been quite shoddy, the stocks have taken a beating, how would you approach realty now? A: There was expectation that there would be a revival in realty across the country. Unfortunately even with interest rates softening, it has not happened. Furthermore, there were reports of the real estate consultants who were talking about oversupply and lack of investment buying in real estate across territories. The worst affected are Delhi NCR, Mumbai and Bangalore as a micro market has the potential to perform slightly better because there the share of genuine demand to investment demand is much higher for genuine demand but still shares are crashing. So, one needs to be extremely cautious and wait till the Reserve Bank of India (RBI) speaks out its mind in June about the rate cut. One needs to see the occupancy levels. So, right now if one has positions in real estate one can hold on to them but I would surely not advocate adding fresh positions in this fall. Q: How do you think an Foreign Institutional Investor (FII) will approach Infosys stock now? Do you think it will be a wait and watch till there is more concrete evidence of recovery or do you see immediate signs of confidence returning back to the stock? A: FIIs would like this because they look at management unlike Indians who are very value and price driven in their buying. FIIs are very futuristic in their thinking and they have always been complaining there is a lack of leadership, there is lack of direction in Infosys. This is what the doctor ordered for them. I think they will really go back to the drawing board and will looking at the premium that Infosys used to enjoy as a stock vis-à-vis the Nifty which it absolutely lost in the last two years. Q: Is the worst in the price for Ranbaxy now?
A: I won't say that at all. I am surprised, there is a negative surprise that we keep getting. There are a lot of other better pharma stocks. One should go off Ranbaxy for quite sometime till all these pre-takeover things settle down.