IT stocks | Oil stocks
How do you protect your capital at a time like this? Do you sit back and wait for the dust to settle or do you take your opportunities right now and get into lucrative names?
I think it’s a very delicate situation and for someone who invests in the market, it’s an extremely difficult situation. My suggestion will be that if you are invested in good quality front line stocks that you have picked up with a specific thought, there is absolutely no need to panic and exit at this point.
It is something that is created by external circumstances, no one had foreseen a war of this magnitude which has already entered the 12th day and no signs of cooling. No analyst anywhere in the world predicted oil at $130, which we saw today. The Rupee saw a massive depreciation today and it touched 77. So I think it’s a perfect storm. At this stage, going out makes little sense.
FIIs and funds sell because they have their own constraints and must meet redemption requests at home or from their own unitholders. But for a retail investor who is not in debt, exiting at this stage does not make sense. Coming to the question of building a portfolio, I would say don’t catch the falling knife. That said, if you’re sitting on cash and want to buy stocks, great opportunities are likely to arise in a few sectors. I would also be very careful in the choice of sectors. I think metals, oil and gas can be looked at. Computing is another sector that can be looked at, but for completely different reasons.
Geopolitical tensions of this unprecedented level will lead to rethinking metals and mining and oil and gas. Now it will be there. Even after the war ends and things normalize, countries will take a hard look at their metals, oil and gas strategy. So if a country or company produces metals or pumps oil or gas, they become much more valuable and that value will continue for the foreseeable future.
So if you are thinking of buying, buy in these sectors. IT for the simple reason that the currency has depreciated. Yes, RBI will step in and there will be some sort of halt in the rate of depreciation, but that depreciation or part of it is going to stay and will definitely help IT companies that are predominantly export-oriented. So, yes, both of these areas can be looked at.
Would you like to be a little more specific about IT actions? Where do you sense the opportunity? Of the mainstream IT names, what would be your pecking order – like Infy, , Tech Mahindra, ?
HCL Tech has been on the mind for quite some time. I think this company brings a lot of strengths and of the names you mentioned they are priced relatively less aggressively and therefore HCL Tech can definitely be picked up. With the corrections we have seen and the way the Rupee has depreciated now, I think even Infy, TCS looks good. But if I have to choose one, I will choose HCL Tech for the long term.