Recommends private financials, retains overweight on IT: JM Fin

Suhas Harinarayanan of JM Financial says 12-month forward market price-to-earnings (PE) at 17.7x remains supported more by compression of cost of capital than growth reset.In Q1FY17, the profit after tax for Nifty grew by 9 percent YoY (ex-financials at 14 percent) versus 1 percent in Q4FY16. Q1 earnings were above muted expectations but still fell short of the double-digit run rate expected for the full year, he says.Harinarayanan further says model portfolio continues to recommend heavyweight in private financials (banks and NBFCs), domestic-centric healthcare, and consumer discretionary (2-wheelers) while maintaining tactical overweight in IT services, primarily through Infosys.In view of recent performance, he recommended removing weight from Titan (3 percent weight to 0 percent), Cholamandalam Finance (2 percent to 0 percent), Techno Electric, Ashoka Buildcon (0.5 percent to 0 percent) and adding to cash (3.3 percent to 9.3 percent).