"We hold a lot of IT stocks and we continue to believe in the story," said Srivastava.
Amid the prolonged economic slowdown that has seen tepid performance by Indian markets there are fears of an impending recession. However, Ajay Srivastava, CEO of financial consultancy firm Dimensions Corporate Finance Services, has said that there is not much credence to the recession fears in an interview with CNBC-TV18.
Srivastava said: "I am not a great buyer of US recession theory. Even if it happens, I think the biggest disrupting economies and technologies come from the US, they are the biggest buyers of technology and I don't think that is changing a lot. Moreover, the technology companies are full of orders, so demand wise there are no issues, it is the supply chain which is the problem and delivering new capabilities is an issue with them.
"Also, if rupee continues with this path and goes to 72 (against dollar), 74, it would benefit the IT companies. I am a great believer in IT, we hold a lot of IT stocks and we continue to believe in the story. Three of the top names are no leverage, cash on the books, quality governance stories. So it is very safe, you must have it and you cannot run an India story without IT," he said.
Talking about the market, he said: "The underlying thesis in the last two weeks has been that there is not so much largecap buying. It is the good quality midcaps, which are really market leaders in respective industry whether it is diagnosis, whether it is paper, whether it is sugar.
"You look across the industry, it is always the marketcap leaders have gone up of the leaders of the industry,” he said, adding that there is some buying interest, some averaging out has taken place. Selling has stopped in the midcap space, there is no foreign institutional investors (FII) presence in the midcap space, so relatively on demand-supply, it is a safe area to play with."
He added: "For the larger of the midcaps, which were quoting way-way below, anything below 1.5 times or 2 times book value for most of the industrial stocks would be a good point where the market will stop selling them off. So if you look around the spectrum of the stocks, you would see good quality stuff quoting at very low book values and have been bought into. So definitely market is bottoming out for those large midcaps."
With regards to the auto space, he said the sector is likely to struggle for a long time because lot of buoyancy in market is built on festive season but it likely won't to play out. "We are not buying anything in auto at this point of time," he said.
Asked about strategic divestment of BPCL he said: "I am not sure whether it will finally happen but I am quite sure in this year it will happen because if the government wants to keep the social agenda going then that spending cannot be supported by economic activity of this country.
"So this sale of public sector unit will come, whether it comes in this year or next but I am sure over longer term, it is matter of 12-24 months and it will not be a matter of choice, it will be a matter of necessity, they will be sold," he said.Source: CNBC-TV18The Great Diwali Discount!
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