Good earnings in Q1 were rewarded and the misses were punished, while the investors’ focus now appears to be back on better quality companies, said Mahesh Patil of Aditya Birla Sun Life AMC.
Speaking to CNBC-TV18, Patil said he did not see a big upside on the Indian market in the near term, while earnings growth will be the key monitorable.
He believes even though on the higher side, the valuations in the IT sector is looking good and IT stocks should be part of one’s portfolio which will give stability.
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“There was a slight disappointment in some of the large IT names in terms of their topline growth and also on the margin front, but by and large, the visibility on the sector, over the next couple of years, in terms of growth looks fairly strong, the pipeline is good. So, this sector should continue to be steady and I do not see any major volatility in the earnings in this sector,” he said.
Meanwhile, Patil said banks with corporate exposure were looking good as the NPA cycle may be coming to an end. “Credit cost for PSU banks is coming down, which is encouraging,” he said.
He is of the view that investors should be very selective in the pharma sector. He prefers domestic pharma stocks which should deliver steady growth.
On Diagnostic stocks, he said there is a need to take a longer view while investing in this sector and believe valuations of diagnostic stocks are on the higher side.
He also said that the risk-reward in some consumer staples looked good.
For the entire interview, watch the video