Mahesh Nandurkar, India Strategist, Jefferies, on Tuesday, explained his bullish stance on the information technology space. In an interview with CNBC-TV18, he stressed that he remains overweight on IT stocks on the basis of strong hiring in the space, and the revenue visibility. He reiterated that demand and revenue growth remains strong for IT stocks.

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He said, “The reason we continue to stay overweight on IT is because of a combination of strong demand visibility, which is visible in constant currency dollar revenue growth on a year-on-year (YoY) basis, also strong hiring numbers that we continue to see. Also if we are looking at a twin deficit kind of a scenario, rising inflation and the taper etc., happening in the US, then you do need some dollar businesses in your portfolio.”

Nandurkar highlighted that it is the FII selling that is keeping the banking stocks under pressure. He added that the Indian market is one of the best in the region and within the emerging market (EM) basket, but it is trading at elevated levels.

Also Read: Is it a good time to buy IT stocks? Here's what Ashmore's Ashwini Agarwal thinks

He said, “There is a clear understanding that within the whole bunch of emerging markets, India's structural story is standing tall and there is a broader agreement that at the fundamental level, from the bottom-up perspective, from the economic outlook perspective, India is looking like one of the best markets in the region and within the EMs."

"But the key concern is still valuation, a lot of that positive news is already there in the price. In fact, over the last 3-4 months in the current calendar year, despite the fact that oil has gone up the way it has, the Indian market has ended up outperforming,” he added.

On the real estate space, he believes the market is at the beginning of a property upcycle. He thinks that real estate will be in a 5–6-year upcycle. According to him, risk-reward is still in the favour of the real estate stocks.

“From a risk-reward perspective, I still believe that this is one of the best sectors- real estate. It is a very small sector as far as the overall market weight is concerned. So, many investors can afford to ignore it at this point in time," he mentioned.

"But I believe that given the various tailwinds in the form of industry consolidation, very attractive trends in terms of affordability, the unsold inventory is almost close to an 8-9 year low, so all these point towards the fact that we are in for 5-6 years of upcycle. So from that perspective, there is a lot of money to be made here, according to me. Yes, there could be some near term pullbacks because of the global worries and oil-related worries,” Nandurkar said.

On autos, he mentioned that the passenger vehicle (PV) growth has bottomed out. Going forward, he expects it to improve. “The passenger vehicle car industry growth has bottomed out. The margins that several of the four-wheelers are showing currently are close to their bottom, but it's a good contra bet to keep in your portfolio from a 12-24 month perspective. So yes, we are quite overweight on the four-wheeler segment of autos,” said Nandurkar.

Watch the video for the full interview.

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First Published:Apr 19, 2022 10:56 AM IST