Rahul Shah picks two auto stocks for strong returns

In the automotive space, if anyone wants to watch it, I think and remain our first choice on our side, said Rahul Shah, VP-Equity Advisory, MOFSL.

What is your opinion on the IT space?

I think IT has been beaten for the last two quarters. QoQ one was obviously the last quarter we saw soft comments from many IT companies and followed by the massive sell off so this quarter was also relatively a soft quarter and the most important to watch when we have also did our channel checks and we found out that the biggest predicament is when we’re talking about a recession situation in many countries so there might be a downturn in IT spending, that’s was therefore the main concern and we saw the massive sale of IT stocks.

But it’s been done, overall if we look at how stocks have been beaten and valuations if I look at it I think in the short term there could be some challenges and that would be a headwind for IT as a sector, but in the longer term IT spending would continue.

I think midsize IT companies and I’ve repeated the last interactions with ET Now many times so I still think midsize IT companies will continue to do well from here and in the short term it might there will be underperformance, but people with long-term, maybe a year or more or later, the IT sector should definitely work.

As for the small banks, we are witnessing a net catch-up at work. Do you think it’s a bit early and risky to bet on these names or given that the valuation gap between the big banks and the mid cap banks has really widened a bit, there’s a bit of catch-up that is expected on small banks?

I think selectively yes the small banks relatively the valuation comfort is there so you have to look at specific stocks in that space and obviously in the big space as well in the big banks as well if we’re talking about the PSU banks their Price is relatively fair so there too the level of comfort is there.

I prefer the likes of and . They also look stronger this quarter and going forward as well it looks like this bank should outperform and obviously in a smaller banking space as well we think selectively it should do well.

How do you see the whole automotive sector?

Obviously we’ve had a spectacular run in the automotive space and there’s still a lot of steam left when it comes to the numbers to come, the monthly numbers as well as the quarterly numbers from most automakers were pretty solid.

So in the future of Eicher we’ve seen a bit of a cooling in the post numbers and the stock has reacted but still looks attractive, in the short term I don’t think there are any major challenges and more the new launches that bode well for Eicher. Second, in this space we’ve been pretty bullish on Maruti in the passenger vehicle space

In the automotive space, if anyone wants to take a look at it, I think Eicher and Maruti remain our first choice on our side.

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