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IT theme to sustain; 'hold' Zomato: Edelweiss Securities

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Aditya Narain, Managing Director, Head of Research, Edelweiss Securities, is of the view that the IT theme is here to stay over the long term. According to him, technology stocks will continue to rise. He is of the firm view that some exposure to the digitization, tech theme is a must.

Aditya Narain, Managing Director, Head of Research, Edelweiss Securities, is of the view that the IT theme is here to stay over the long term. According to him, technology stocks will continue to rise. He is of the firm view that some exposure to the digitization, tech theme is a must.
"I think there are other themes like the IT theme, which we have been bullish on for quite a period of time. That will sustain, the excitement around it will probably ease off a little bit, but the underlying trend will actually tend to sustain," he said.
He explained, "I think the whole technology space is very interesting for India. It's something that one must capture and one must have a certain balance across one's portfolios."
When it comes to the new-age stocks, Narain believes investors need to take into account the long-term viability of the business models before diving head-first. He has a ‘hold' rating on Zomato for now.
"We cover Zomato on which we have got a hold recommendation," he said.
According to him, consumption has been concentrated at the top end and needs to go lower.
He said, "It’s going to be a time where the lower end, the bottom end of consumption starts climbing its way back, which is different from what we have seen so far, where it's been the top end, it's been a narrow segment that has been showing demand and consumption capability."
"Next year, that's going to be probably the more decisive thing that we will need to look at, which is the lower end whether it is two-wheeler demand or consumer staple demand picking up a little bit or the benefits of costs that come in, which plays to some of these businesses. So I would say that it is going to be a linear trend this year, that is probably not factored into the market," he explained.
Narain stated that he likes real estate assets more than the real estate stocks.
"We like the theme, and the likelihood of there being continued momentum probably a little bit more than we like the stocks at a portfolio level," he said.
For the full interview, watch the accompanying video.
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