Indian IT sector slowly playing catch up; will continue to outperform: Rohit Srivastava

"We have been seeing its momentum pick up and the banking sector also as a whole start making a comeback. So, it was clearly the return of the private banks you can put it that way and HDFC Bank has sort of led that charge," says Rohit Srivastava, Indiacharts.com.

What do you make of the move that we are seeing on HDFC Bank and it is having a rub off impact of course on the likes of ICICI, etc, also. Do you see this kind of up move to be sustainable or do you think it is that one day wonder on account of this entire MSCI adjustment news?
Rohit Srivastava: No, I definitely do not think this is a one-day wonder. HDFC Bank has become a multi-week wonder because from the point where it bottomed close to around 1300 which was a sort of double bottom over a one-year basis.

We have been seeing its momentum pick up and the banking sector also as a whole start making a comeback. So, it was clearly the return of the private banks you can put it that way and HDFC Bank has sort of led that charge.
So, now, it has actually surpassed all the highs of the last couple of years, that puts it in all-time high territory.
Usually that is a sign that something new has started that will last for a while.

So, it is not a one-day wonder or a one-week wonder it is going to be around for I think couple of months, you will see the trend in banking really continue in the positive direction.

But what is the view on Nifty then? Do you think this charge up on the Bank Nifty is something that will take Nifty past the level of 24,500 soon?
Rohit Srivastava: It does look like that. We are eyeing 25,800 as the next significant point to which we will move towards slowly and steadily. We are still below 25,000 of course. This current leg itself could possibly closer to the budget be around 24,800.

So, yes, the trend is set and of course Bank Nifty is providing a lot of that momentum, but if we do a two-three-week analysis, you will see that different sectors have led this charge at different points of time.

For example, you have the IT sector which on a one-month basis has outperformed the entire pack. You also have pharma stocks that have participated in this move.

So, I think a bit of many of these will continue to play a role. IT, for example, globally is doing very-very well. So, I think Indian IT which was beaten down is now going to slowly play catch up with what is happening around the world and in that sense the IT sector also should continue to outperform.

And pharma is sort of on a comeback trail. Even pharma mid and smallcap stocks that were not participating over the last year or two have all started to show positive momentum on weekly and monthly charts and so that sort of makes pharma also a very broad-based rally not just around a couple of stocks.


You talked about a couple of sectors which are bouncing back IT, pharma, etc. Which are the names where you would recommend kind of churning out the profits out of let us say auto, real estate, etc, and anything else on your radar which looks interesting either stock specific or a sector call?
Rohit Srivastava: So, staying away for the time being from PSU stocks that were extremely hot last year on the back of the elections. So, somewhere that needs to take a breather. So, you really give it time and that does not mean some of the stocks would still do well, but if I had to do a little bit of underweight-overweight kind of movement, it would be a little less of PSU and a little more of some other things, but not the interest rate sensitives.

You mentioned real estate and autos which are interest rate sensitive because my other view is that interest rates will slowly start coming down.

In fact in India they will probably come down a lot more than other markets around the world and in that sense interest rate sensitive sectors would also eventually benefit.

So, you would not really want to get away from them completely, especially medium to longer term you still want to stay with the sensitive sectors.