Investors should buy Oil India & Idea: Gautam Sinha

Gautam Sinha Roy of Motilal Oswal Securities believes that IT could be a good bet from a near term perspective. He prefers picking Infosys and Wipro in that sector.

From a long term investment perspective Auto and cement sectors looks good to him. However, he prefers waiting for a while before starting to buy these sectors. He advised investors to buy Idea Cellular and Oil India. Also read: Maruti & M&M top picks: Ambareesh Baliga Below is the verbatim transcript of his interview to CNBC-TV18 Q: On the flip side, because of the rupee depreciation, we saw lot of these IT stocks move up in trade. TCS was up 4 percent on Friday. In the next week, would you bet on any IT names purely because of this theme? A: There is a good valuation upside in many of the IT counters. If you look at a broader timeframe rather than just a week, these stocks have not really performed that well inspite of rupee depreciating and inspite of the fact that the demand environment is still expected to improve. If we are talking about the US economy showing green shoots of recovery - that is direct benefit for these companies. From that perspective rather than just a momentary depreciation in rupee would be positive on IT. Select stocks where we have valuation support. Probably more of the frontline names like Infosys and Wipro which are trading on the lower side of the valuation band as well as have higher upside from increase in discretionary spend in the US. So, Yes, IT could be a good bet from a near term perspective. Q: If you had to give us a couple of stocks to buy into as we head into next week even with a longer term horizon what would they be? A: Our perspective comes from the fact that there is a lot of indecisiveness in the Indian market which is led by global macro which creates some degree of unpredictability. Other than that there is the event risk of the next Reserve Bank of India (RBI) policy meet on 17. So, we will stick to stocks where we see some secular growth drivers as well as valuation upside. So, those would be Idea Cellular and Oil India because both of these stocks are very high quality stocks where we see secular growth drivers present. Even, if there is a big downfall in the market we don’t see huge downside risk to these stocks. There is a lot of buying interest in both these counters. So, these would be the two stocks that we would advice investors to look at currently. Q: The two pockets that saw pressure last week one was cement and the other one was autos both for fundamental reasons. Auto sales were very weak and cement as well there is some talk about the demand slipping ahead of the monsoons as always. From these two pockets is there anything that you would buy in the dip? A: These are both sectors where you get high frequency data at least monthly. This data is used by economist and strategist to get a feel about the improvement or change in the broader economy. Both were expected to show some signs of revival at least by the middle of this year. When we were at the beginning of this year, we were expecting by the middle of the year there would be some improvement in outlook, which is not happened. That is the main reason why these stocks are underperforming. From a long-term investment perspective both of these sectors are very strong in cash flow delivering and high quality sector. So, you could find good investment ideas but I would still wait for a while before starting to buy these sectors.