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Last Updated : Jan 09, 2017 11:01 AM IST | Source: CNBC-TV18

Here are Abhimanyu Sofat's top trading ideas

In an interview to CNBC-TV18 Abhimanyu Sofat of IIFL shared his reading and outlook on the market.

In an interview to CNBC-TV18 Abhimanyu Sofat of IIFL shared his reading and outlook on the market.

Below is the verbatim transcript of Abhimanyu Sofat's interview to Latha Venkatesh, Sonia Shenoy and Anuj Singhal on CNBC-TV18.

Sonia: We were discussing how the IT stocks should be approached hereon because of the H1B visa cost going higher, what are you advising your clients to do now?

A: From a portfolio allocation perspective, I believe that IT has to be underweight going forward seeing what is happening in the US clearly on the onsite side large part of the revenue -- probably 25-30 percent of their revenue -- there could be some kind of an impact in that kind of a business.

So for IT, the story going forward is largely based on how the rupee moves, if you have to be bullish on IT otherwise if you talk about volume growth perspective, I am a bit circumspect that going forward IT is a sector to be in. Obviously, since there is a significant amount of allocating in the index for IT, some kind of exposure one always needs to have. In that kind of a scenario, something like a Tech Mahindra or Wipro, which are very low in terms of valuation related to the bigger companies those could be ones, which one can take an exposure on.

Anuj: What about metal names? We have seen a big rally play out over the last few months, do you think that is a space which can still make a lot of money for investors?

A: For metals, the issue that one sees is what is happening on China. Clearly, there has been a very significant outflow of capital, which has happened in last couple of months from China and there has been a significant tries of inventory at Chinese ports for things like iron ore and all. So I am not so convinced about the increase in prices of metals over the last couple of months. So rather I would go more on the crude relative play, something like an ONGC where one can clearly see that there is some kind of a momentum in terms of crude price and I do expect stability of prices between USD 50 and USD 60 which could be good for these companies like ONGC as well as this kind of number is pretty good for the oil marketing companies (OMCs) as well, refining margins have been pretty good. So I would go for an oil and gas sector rather than for any specific metal stock at this juncture.

Sonia: What are your top picks in the private sector banking space because some of these stocks like Yes Bank for example have seen a very good run lately in fact it is now less than 10 percent away from its 52-week high?

A: In the private sector banks, we were rather focused on something like a City Union Bank where there is a stable ROE in terms of valuation, it is available at 2.1 time price to book FY18, something like RBL Bank where the growth is going to be more than 35 percent next two years on a CAGR basis. So those are kind of stocks that we like. Among the larger ones, we would go for something like HDFC Bank where the stability of earnings is likely to be better relative to others, exposure to the high concentration NPA segment is also lower. So those would be our pick in the private banking space.
First Published on Jan 9, 2017 10:09 am
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