People are expecting the strong recovery to continue that has been seen in the current quarter in the auto sector, said Nischal Maheshwari, CEO-Institutional Equities and Advisory at Centrum Broking on Thursday.

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“We have to wait to see whether these numbers still translate itself basically into what we have seen in the last two-three months especially on the four-wheelers and also on the commercial vehicle (CV) cycle,” he said.

Maheshwari believes this could be a good time to book profits in some of the auto stocks.

“Especially on the CV, both Ashok Leyland and Tata Motors seem to be running ahead of the expectations. Two-wheelers seem to be leaving some scope for upward bias, Maruti seems to be ahead of its numbers. So I think this could be a good time to take away some profits on the auto stocks.”

On the public sector undertaking (PSU) side, there is some amount of optimism. Maheshwari considers PSU banks as good trading stocks except for a few.

“Possibly PSU banks will also do better than what is right now being put out by the Reserve Bank of India (RBI). So valuation and more optimism on the recovery in the economy is what is making people buy some PSU banks.”

There are more legs as far as the pharmaceutical sector is concerned, he said.

“Larger companies which have got a spread across generic and formulations, I definitely see more legs to growth, not only domestically but also internationally. So our top picks continue to remain Aurobindo Pharma, Sun Pharmaceuticals and Dr Reddy’s Laboratories (DRL) in that order,” Maheshwari said.

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(Edited by : Ajay Vaishnav)