3 industries where Rahul Shah is bullish right now

We have seen crude oil prices fall this week as many industries such as cement and paint gain in price. Which sector could lead the rally next? What would you choose on the back of this story?

I think we have seen India outperforming the global markets. India was one of the biggest beneficiaries of last week’s drop in crude oil prices and we see around buying in most sectors.

If we look at the consumer group, the number of cars has increased quite strongly since the last few months. Automotive is the biggest beneficiary we will see momentum increasing. Second, with the festive season coming up, it will also fuel this whole sales element as well. Along with the auto package, tire stocks will see demand return. I will remain overweight in both areas and especially in the automotive sector.

Smart talk

IT is one of the areas where we’ve noticed that valuations are looking good now and as the week goes by Nifty IT is one of the most profitable sectors. But if we talk about the metal sector with the news that after the energy crisis in Europe, a lot of smelters are closing. Do you feel that Indian players have a chance to grow in the global market?

I’m sure that’s why we’ve seen a lot of metal stocks rally over the last couple of sessions and over the last 15-20 days if we see similar stocks or they’re gaining momentum again.

What we’re seeing in Europe is obviously going to benefit the whole package of metals and then that can add value and maybe exports can go up in some companies. So certainly companies like Hindalco, JSW Steel and

looks like the biggest beneficiary of this.

IT stocks stood out with a gain of about 3.5%. We have seen that in the last three trading sessions that it has risen steadily but on Friday it was the biggest gainer. Is it fair to say that the worst is over or shouldn’t it be read too much in just a week?

I feel that this valuation is reasonable for all large-cap IT companies as well as mid-cap IT companies. I think most of the damage is over. Looks like the stocks are just consolidating right now.

I think one should slowly and steadily build one’s portfolio with IT stocks. It may not work for a quarter or so but I think later on if we take a longer-term view, IT spending will continue. It could be just a flat quarter for a year or a quarter or two but then I think things will start to improve. So I think that stock should definitely be in our portfolio and if we don’t it’s time to build it with some IT names.

If you had to choose the top three areas that will be focused on next week and over the next few months, what would your top bets be?

I think finance will work fine. Also PSU banks are building their momentum. We have seen

reach new highs. So I think that should be followed by the second ladder of PSU banks. The big PSU banks like and are my top choice in the financial sector.

I’m also optimistic about the auto sector. In the automotive sector, I think passenger cars will be better. I think

from here looks very convincing as their monthly numbers have been quite strong over the last three or four months and I think the valuation is also very attractive.

Also, M&M stock has hit a 52-week high and is in the spotlight. So I think agriculture plus passenger car, both segments will do very well for Mahindra & Mahindra.

I think these two areas look pretty convincing. Also, the IT package should definitely be considered for value pick.

(Disclaimer: Recommendations, suggestions, views and opinions expressed by experts are their own. These recommendations do not represent the views of Economic Times)

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