Exit ONGC, prefer midcap IT stocks: Sharmila Joshi

Sharmila Joshi of sharmilajoshi.com told CNBC-TV18, "The problem here is really to do with how you expect crude to trade. It is very possible that crude could very well reverse the trend in next four or five year and start moving again to those USD 120 kind of levels that we used to see on crude, maybe one or two years back or so. And that is the kind of environment that benefits as company like Oil and Natural Gas Corporation (ONGC) which is an exploration because then the kind of margin that they make on their bottomline suddenly sort of escalates. And the current environment is obviously the opposite, is the reverse where we are actually seeing more pressure coming in on crude prices in days ahead, especially today, given the fact that we have seen this whole Iran development as well which simply put will mean that there will be greater oil production coming from Iran into play and that could further put pressure on brent crude prices."

 

She further added, "The way we envisage Indian markets over the next four or five years and I would say that that picture seems to imply that our markets would do well which is why it makes sense to just switch out of ONGC and either get into, if one is a slightly shorter-term player then get into an oil marketing company though those prices have really run very high. So, ideally just shift into another sector which may not be doing well just now but where there is a possibility that you will see recovery in the next four or five years. So, maybe buy some of the beaten down midcap IT stocks or something in capital goods which also could do well with a four or five year view, so my advice would be to switch."