Positive on commodity stocks; trimmed overweight stance on IT: Invesco MF

Invesco Mutual Fund continues to remain positive on commodity stocks, Taher Badshah, CIO–Equities, told CNBC-TV18.

“We are inclined to continue on commodities even at this stage. The longer-term cycle of commodities will unfold a little later and we will know how supply is behaving post environmental, social, and governance (ESG) environment, so this is something we would tackle at a later date,” he said.

On auto space, Badshah said, “What is more important as far as autos are concerned is their ability to restore or support or control their margins and that is where there is a worry. But since commodity prices are holding up or not going up any further from here, maybe the ability of a lot of these auto companies to restore some part of their margin losses could also come. Therefore, the trend for the auto sector could look better, compared to what it has been in the recent past.”

Badshah also said that urban demand for autos could outstrip rural demand.

According to him, IT valuations appear to have hit the upper end. “In the case of IT, we have caught up a bit on valuations across, not just in the mid and smallcap space. So, we are inclined to play from a neutral standpoint rather than being too aggressive at this stage. We have played IT well over the last 6-9 months and it continues to remain a core part of our portfolio, but we have trimmed our overweight stance.”

For the entire interview, watch the video.