Expect IT to be out of favour for some time: Devang Mehta, Anand Rathi Securities

In an interview with ET Now, Devang Mehta, VP & Head Equities Sales, Anand Rathi Securities, talks about the market and some sectors. Excerpts:

ET Now: How are you reading the mood of the market given the fact that a lot of the political headwinds seem to be out of the way? There was a bit of a question mark on FDI in retail, but the government has managed to push it through in the Lok Sabha. What is your reading of the situation?

Devang Mehta: All the major ingredients which are required for a good bull market to sustain seem to be in place. Liquidity is around $20 billion of FII inflows and we are still counting. The sentiment is also improving to a great extent and all the IPOs which are coming are mirroring the improved sentiment on the ground level. Fundamentals which were not great seem to have bottomed out.

GDP data and industrial production data suggest that things seem to have bottomed out. Inflation is showing signs of topping. All good factors are here. If somebody is a long-term investor, this is one of the best times we start accumulating and buying good quality stocks. Being stock specific would be the mantra at this point.

ET Now: What is your call on the entire retail pack? Does it seem from an investment time-frame, there is still a long time to go to see something remarkable and dynamically changing with the sector irrespective of the trading moves?

Devang Mehta: A lot of things would need to change at the ground level. A lot of policy decisions still remain to be seen. All these stocks have reacted very well sentimentally. People who have bought in at good prices can partially book their profits. From the retail sector, we would like stocks like Raymond, Arvind or Century Textiles. All these stocks have a lot of play in them. They will be benefiting more by these reforms rather than only Pantaloon and Shoppers Stop.

ET Now: How are you reading the IT sector now because Cognizant has been the one standout performer coming out with some negative outlook for 2013. It has taken the market by a surprise. What is your fundamental call in the sector in the near term?

Devang Mehta: IT is showing some signs of weakness and has generally performed well. Though TCS has done extremely well in the past few quarters, but there is going to be a gradual shift from the so-called defensives and IT is one of them. People are now tilting their portfolio towards the more rate sensitives and high beta space. Therefore, IT would be out of favour for some time. It is not a good trading play and is just a part of portfolio that one needs to keep the faith into, but otherwise they are not good trading plays at this point.

ET Now: What about the high beta space, the likes of the realty pack? Is there anything that looks like a good investment bet?

Devang Mehta: In realty probably something like HDIL, Indiabulls Real Estate, Oberoi Realty or Sunteck Realty -- which are doing well in the pockets of Mumbai where there are still no signs of prices coming down or not much of a slowdown -- look good. Selectively these stocks could do well as the interest rate cycle turns towards the first quarter of the next calendar year or the financial year. Real estate as well as some of the infra stocks can be selectively accumulated.