Corporate numbers have been pretty encouraging this season, which has also led the Sensex to rake in some gains. So which are the sectors that are shining post this result season? Experts give out their favourites to Moneycontrol.
Sectors to bet on: IT, Cement
IT has been the darling for almost all market watchers and it has further asserted this faith with a stellar set of numbers. With topliners Infosys posting a 46 per cent profit and 15 per cent, and TCS with a profit of 42 per cent and 11 per cent (QoQ), IT definitely gets a thumbs up from most experts.
Sumeet Rohra of Antique Stock Broking says that both IT and cement are the outright winners in this result season. He has been positive on IT for a long while on the back of rupee and future prospects of these companies.
He says, "Frontliners like Infosys and TCS are good to bet on. I see Infosys going up by around 20 per cent even from these levels, so one can invest in it."
Upendra Kulkarni of Fortress Financial Services is positive on IT not just on the back of results, he says, "The IT sector will be a beneficiary due to the fall in the rupee. Also these companies are cutting costs and most of their work will take place through outsourcing. Further, since most IT companies are not net borrowers, they will not be touched by the interest rate fluctuations. All these would allow topline IT companies to benefit immensely."
However, he adds that he would not rush into buying any of the IT frontliners at this point, but at any decline he would pick up Infosys and TCS.
Cement sector is the next favourite. Most cement companies have posted phenomenal results. Pivotals like ACC has posted a profit of 113 per cent YoY and 24 per cent (QoQ), meanwhile Gujarat Ambuja had a profit of 109 per cent (YoY), Ultratech also sprung a surprise with a profit of 199 per cent (YoY) and 106 per cent (QoQ).
Kulkarni is confident that cement will be in action for the next 1-2 years. He says, "Cement companies will be in expansion mode now due to the shortage of capacity. Also now with consolidation in the industry, the pricing power will be back in the hands of the manufacturers. So, cement companies will gain on the pricing side too."
Technical analyst, Rajat Bose too is bullish on the future prospects of cement, he believes the upside in cement stocks would continue.
Bose says, "Technically speaking, cement stocks have already shown some kind of a run up and chances are that one might see some more upside here because cement happens to be once sector, which is witnessing lot of interest. Critically speaking, as long as India Cement maintains above Rs 190 level, one can expect a further upswing."
Kulkarni backs Gujarat Ambuja, ACC and Grasim from the cement space, and Rohra is ready to bet on Ultratech.
Auto, engineering are not too far behind
Auto and engineering have also posted some good numbers, so while they might not figure in the top three list of market watchers, they definitely deserve a pat on their back.
M&M and Tata Motors have posted numbers above expectations, which has put auto on the positive radar of experts, however some feel that with the uncertainty surrounding oil prices, one must not get into this sector aggressively.
Engineering is also a mixed bag, but some midcap companies have done well.
Sanjay Dutt of Quantum Securities says that some midcaps and largecaps look promising. He says, "These companies are trading at multiples of 3 to 7 at this point. I think these companies need to be watched because they have already corrected 30-70 per cent in most cases. One needs patience because time will test you, but I think big money will be made here now."
He also specifically likes KCP at this point. He says, "I hold this and like it too. It came out with good numbers and some of these stocks need to be looked at because they were really bought at 50-60 per cent low from their highs. They have a good order book and definitely money can be made there."
So, that is the verdict from marketmen after the first quarter numbers. While IT and cement take the top spots one can also take a look at auto and engineering.
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