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    We have trimmed our position a bit, but our confidence in IT is not shaken: Vikas Khemani

    Synopsis

    “We continue to remain below the same positions in IT we had somewhere late last year but otherwise, in this year, we have not changed much. It is not that we will not change; we keep evaluating depending on the valuations and how they evolve, but so far. we have not changed that.”

    Long-term money coming in; auto, banking to do well, avoid metals: Vikas KhemaniETMarkets.com
    Vikas Khemani, Founder, Carnelian Capital Advisors
    “We are quite confident and we are kind of overweight on banking as a sector as well. I think there is a good probability of banking outperforming. It depends on what period we look at. But I guess from the next 12 to 18 months’ perspective, banking shows a lot more promise,” says Vikas Khemani, Founder, Carnelian Capital Advisors

    It seems the market is inclined up but it is going to be a slow rise. , But will it have all sorts of weather disturbances and things acting up as well?
    We see the weather changing all the time and in markets, we see the mood changing all the time. Everything in life has some correlation. One can apply learning from one space to another. There is a term called Bistari Bistari in Nepali which means slowly slowly. As long as you do it slowly, you can climb the steepest slope, without too much hassle. The same will apply to the markets when things are difficult. Just do it slowly slowly and things will be alright.

    You have been long on IT. When the opinion changes and when the prices are so dramatically different from your positioning, does it shake your belief or is this like a bull market correction and we need to look through it?
    I always believe that one should always take market price as a feedback mechanism and go back and retest the hypothesis because investing is about making a hypothesis and retesting the market will give you a different feedback. Post the recent correction, we connected all the companies including Infosys and HCL Tech in a detailed analyst meet.

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    One thing is coming out very clearly that so far there is no letting down in the demand environment which I think is holding on very well.

    In fact they are saying that it is non-discretionary this time and also deflationary for the clients. They are helping them cut costs and manage costs in a big way. So far companies have been saying that there is a very good robust environment.

    Regarding attrition, with a little bit of track down in the start-up ecosystem, we have earlier seen the ecosystem absorbing a lot of talent at a higher cost. That has eased off and so most companies are expecting that in a quarter or two, the attrition pressure should be behind. I guess the sector went through a combination of expected slowdown in the US, pressure on attrition and a lot of other things.

    That is a reason that stock has done very well. So we saw some amount of correction happening. Both the stocks are trading at a very reasonable range and even 20 to 25 times PE depending on which stock you look at. But all of them are guiding a 14-15% earnings growth, which is a very robust growth and especially which is dollar hedged.

    In an uncertain environment with a weakening rupee, I personally feel there are good businesses to own. Sometimes they tend to surprise in the short term and hence one can take that in stride and stay convinced.

    So our belief is not shaken. We have trimmed our position a little bit, but otherwise we have continued to remain invested.

    Have you changed your top positions in the IT space?
    Not really. We continue to remain below the same positions we had somewhere late last year but otherwise, in this year, we have not changed much. We continue to keep evaluating and it is not that we will not change, we keep evaluating depending on the valuations and how they evolve, but so far we have not changed that.

    What is that one thing as an investor you would like to hear from the management of Mastek since it is your portfolio stock?
    It is a great company. The new leader Hiral is a very mature leader and there is an analyst meet and they had a vision which is becoming 3x by 2025 or 2026, which, if they end up doing it, will be a great wealth creator. So far it has done well.

    By the year end, do you think banks can outperform IT?
    It could. A lot depends on the environment but we are bullish on both banking and IT. But having said that, banking last year has not performed. So far, it has been an underperformer for a long period of time and signs of credit growth are happening around and in a slightly inflationary environment, banks tend to do well. We are quite confident, we are kind of overweight on banking as a sector as well. I think there is a good probability of banking outperforming. It depends on what period we look at. But I guess from the next 12 to 18 months’ perspective, banking shows a lot more promise.



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    (What's moving Sensex and Nifty Track latest market news, stock tips and expert advice, on ETMarkets. Also, ETMarkets.com is now on Telegram. For fastest news alerts on financial markets, investment strategies and stocks alerts, subscribe to our Telegram feeds .)

    Download The Economic Times News App to get Daily Market Updates & Live Business News.

    Subscribe to The Economic Times Prime and read the Economic Times ePaper Online.and Sensex Today.

    Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price

    ...more
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