ADAG pack to remain under pressure, says Sharekhan

Shares of Reliance ADA Group companies are under severe pressure today trade after reports that the conglomerate may come under fresh scrutiny over its role in the 2G scam.

In an interview to CNBC-TV18, Hemang Jani, senior vice president, Sharekhan said, ADAG pack will remain under pressure. He likes HCL Technologies, IL&FS Transport and Divis Laboratories. Also read: Tulsian cautious on Kingfisher Airlines, negative on ADAG Below is the edited transcript of his interview with Ekta Batra and Latha Venkatesh of CNBC-TV18. Also watch the accompanying video. Q: What are you making of the entire ADAG group and the news with regards to Anil Ambani now? A: There is going to be an overhang of this CBI investigation and the current status report that they have submitted to Supreme Court. Apart from that, the fact that most of these companies have a very high component of debt and we are not seeing any signs of interest rates softening atleast in the near-term, that is again going to be major obstacle. We think this pack will remain under some pressure Q: Any stocks that you think will outperform in the heavyweights? A: We think that company like HCL Tech could do extremely well for the fact that the overall demand and operational environment for the ERP and infra space management continues to be good. HCL Tech has a major presence there. In terms of the guidance, it is one of the best that they have given to October to December quarter. As far as hedging is concerned, HCL Tech with just 20% net receivable being hedged would be a big beneficiary of rupee depreciation. And that would be reflected in the quarterly numbers. It is available at 35% discount to a company like Infosys and TCS. So, we think that HCL Tech could be a good bet to look at. Q: What about metal space? A: We have seen this entire space remaining extremely volatile. Last month was very weak for the entire space including Tata Steel, JSW Steel, Sterlite, Sesa Goa etc. We think that the overall bias continues to be negative. If we see some kind of major relief in euro because of some package, you could see some spike. But we don