Of particular interest was LIC’s strategy in dealing with banks and IT stocks. In case of Canara Bank, India’s largest domestic institutional investor was seen reducing stake by 122 basis points to 7.34%, IndusInd 59 bps to 2.42%, Karnataka Bank 49 bps to 4.17%, ICICI Bank 28 bps to 7.34%.
However, the holding went up in HDFC Bank, SBI and Axis Bank. Other bank stocks in LIC portfolio include Bandhan Bank, Bank of India, Bank of Maharashtra, Central Bank of India, City Union Bank, IDBI Bank, Indian Overseas Bank, Kotak Mahindra Bank, PNB, Jammu and Kashmir Bank, South Indian Bank, UCO Bank and YES Bank.
The India bull was also seen raising stake in IT companies like Infosys, TCS, Tech Mahindra, Wipro, LTIMindtree and HCL Tech.
Among other stocks, LIC fund managers were seen making bullish calls on Tata Chemicals, Deepak Nitrite, SBI Cards, SAIL, Berger Paints, Pidilite Industries, IRCTC and L&T.What should investors do?
Given the robust domestic macro situation, robust inflows from domestic investors and broadly in-line Q2 earnings season, analysts see bond yields and the impact of the Israel war as the only major concern that can derail the bull run that has seen minor hiccups in October.
With the strong catch-up by midcaps and smallcaps in the last couple of months, flows may now likely shift to largecaps with a higher margin of safety due to time as well as price correction.
“The current setup is a ‘Buy on Dips’ market. We recommend investors maintain good liquidity (10%) to use any dips in a phased manner and build a position in high-quality companies (where the earnings visibility is quite high) with an investment horizon of 12-18 months,” said Neeraj Chadawar of Axis Securities.
An interim review of September quarter earnings season by Jefferies shows that IT, consumer, non-bank lenders, chemicals and industrials have seen higher proportion of downgrades while autos, large banks, power, property results trended better.
Of the 80 companies on the brokerage’s radar, meaningful EPS upgrades were seen in Maruti, ICICI Bank, JSW Energy, JSW Steel, Asian Paints, Nippon Asset, Polycab, Oberoi, Cipla. Notable cuts were in IT cos (TechM, Wipro), Chemicals (SRF, NFIL, UPL), L&T, Jubilant Foods, select Pharma (Syngene, Laurus), few BFSI (Bandhan, MMFS, ICICI Pru), Finolex Industries Kajaria and Indus towers.
Among largecap stocks, Axis Securities has buy calls on ICICI Bank, Maruti Suzuki, SBI, Varun Beverages, Bank of Baroda and ITC.
While brokerages remain overweight on banks and other financial stocks, the outlook is bearish on IT companies which may face short-term challenges on demand front as well as on the margins front on account of the economic slowdown, macroeconomic uncertainties, and weaker outlook.
“We believe full year impact of project run-offs will likely offset, at least partly, incremental revenue contribution from large deals. At this stage, we would rather err on conservatism. We remain cautious. We see growth-value equations favourable only in Coforge at this stage. Growth visibility is better at Persistent but full valuations cap upside,” JM Financial said.
(Data inputs: Ritesh Presswala)
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(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)