In case of information technology stocks, Pradip Shah remains positive, while highlighting that they have been changing business models over time.
With several state elections lined up in 2018 in the run-up to the big general polls next year, market experts believe that political stability is a big trigger going forward.
“Looking ahead, political stability is an issue. While the ruling party won in North East on anti-incumbency factor, what about this sentient in states such as Rajasthan, Madhya Pradesh and Chhattisgarh?” asked Pradip Shah, Chairman & Founder, IndAsia Fund Advisors in an interview to CNBC-TV18.
Currently, global economies are doing well along with issues of Korean tensions and ebbing trade war fears. In India, the demand situation is good and we are emerging out of GST and demonetisation issues too, he said. But there are selling triggers existing till March as well such as long term capital gains tax, among others.
Shah believes it would be adventurous to buy PSU banks at current levels. “There is more pain to come. While individual banks may be able to resolve issues better, they will also need capital,” he told the channel.
In case of information technology stocks, he remains positive, while highlighting they have been changing business models over time. They are no longer the firms that they were even five years ago.Among non-banking financial companies (NBFCs), he said \they were benefiting from the hesitation of PSU banks to increase the loan book. “Clearly private banks and NBFCs are taking the market share and that will continue,” he said. But, within that context, NBFCs are multiple intermediaries who borrow from banks. So, the cost structures are worst and hence private banks are better placed.