Is the price action in banks a function of what we heard from RBI on Friday?
Yes, in a way you are right. There is caution in the air as far as the banking space is concerned. But nevertheless one should mention here that the first quarter result of most banks has been a positive surprise simply because of two things. One, the moratorium given by the RBI has not been used to the fullest extent by the bank customers. So that tells you there is a great deal of cash liquidity available with many of the clients of the banks.
Are there any ancillary trends to the economic activity picking up; be it paints, cement which you think are investment worthy?
Let us get your take on some of the IT names. What kind of preference or weightage would you really give some of these IT counters at this point of time?
If you recall, when the Covid phenomenon began in March, we were the ones who were saying that the IT company or IT sector as a whole will continue to do well. That particular prediction has somehow come through and that is simply because IT companies are first and foremost accustomed to work from home kind of an environment.
Two, there is an unabated activity happening on the deal side. Many of the IT companies constantly work towards engaging more and more clients both horizontally as well as vertically. Therefore, large deal winds are coming to the kitty of most of the IT companies. That is what is driving up many of the IT companies apart from the defensive strategies that most people would have applied by pushing their portfolio into the IT stock.
So right now, I would say the outlook for IT companies is strengthening because there is a lot of background work on deal activity that has happened and which will come to the surface once we get further into the fiscal year. Most of the IT companies have also demonstrated that they are able to up their margins in this period of lockdown. So a healthy set of financial numbers are getting posted. I would not be surprised if IT companies further get re-rated upwards.
In a way, the market’s perception about retail investors actually entering the market and taking it higher to a level where it is the right time to sell has been simply because retail investors have largely been interested in smallcap and midcap names in equities. But that is not the case in the current environment where you have these Robinhood investors. The Robinhood investors are taking equal interest in even largecap names and investing in the broader set of stocks and therefore this effect or this perception about retail investors being taking the market to a level which is unsustainably high does not hold true any longer; at least in this environment.
They are not into smallcap or midcap stocks. They are into the largecap stocks and therefore I would reckon that most of these retail investors are becoming a lot more savvier. They have a large amount of research advice backing them up and that research advice is coming in through a lot of platforms that you just talked about. So research is tailor made and available at your fingertips and good quality research is available even to the retail investors. No longer it is the case that institutional investors would have quality research behind them backing their ideas and backing their stock buys.
Retail investors also have quality advice and I would reckon that this phenomenon of the market going up with higher retail participation will continue for some more time because they are also getting invested into the largecap names. So yes, to some extent, I agree with what you are trying to say. But the bad picture that gets painted when retail investors enter the market is no longer true.
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Top Trending Stocks: SBI Share Price, Axis Bank Share Price, HDFC Bank Share Price, Infosys Share Price, Wipro Share Price, NTPC Share Price