Be selective in IT, like Infosys & HCL Tech: Ambit Capital

Dhiraj Agarwal, co-head of equities at Ambit Capital, believes it’s time to be cautious on the midcap index. The run-up in select stocks have been very steep and hence calls for caution.

Speaking in an interview with CNBC-TV18, he said, “Smallcaps and midcaps are where a lot of action is and it’s getting slightly scary at this point of time; valuations are going through the roof, so it’s time to be little cautious in that space,” said Agarwal.

On IT, he said, “In largecap, we like Infosys and HCL Technologies. In IT, our view is to not get carried away by the good growth numbers of this year because growth will soon normalise to a 9-10 percent range and valuations at this point of time are reflecting a much higher growth curve. So, one needs to be very selective. It had a great run in the last couple of years; it’s time for a breather and be very selective.”

On unlock theme, Agarwal said, “We like a couple of hotels like Chalet Hotels, Lemon Tree Hotels. In the whole unlock and back to office trade, we like Indigo (Interglobe Aviation); more than just an unlock trade but also from a longer-term structural point of view. It’s a big beneficiary of consolidation in the sector. I think hotels, travel, tourism and commercial vehicles are bound to benefit.”

For the entire interview, watch the video.