For IT, 2024 might be a tougher year than 2023: Sandip Sabharwal

Around 212 stocks of companies with a minimum market capitalisation of Rs 500 crore have eroded investors wealth considerably in the first half of 2023, as per data analysed by ETMarkets. Most of the laggards were midcaps and smallcaps, though the broader markets have outperformed the largecaps in recent months. Adani Group companies dominated the list, with Adani Total Gas falling more than 82% YTD. Infosys was the worst performing stock in the frontline IT pack, and Hindalco Industries was among the severely affected largecap metal companies due to a demand slowdown.

According to Sandip Sabharwal, large group stocks like Tatas, Mahindra Group, Adanis, and Reliance have performed well. He believes if the economy sustains 7-8% growth, many companies and groups will continue to thrive. However, he is cautious about HDFC Bank and warns investors tobe wary of the overvaluation in smallcaps.

After inline numbers from TCS and disappointment by infy, it might appear that Q4 earning season for the IT sector has taken a back seat. That might not be the case, as Q4 results will throw a light on how individual companies are managing the situation in a changed environment. Stock Reports Plus, powered by Refinitiv, is a comprehensive research report that evaluates five key components of 4,000+ listed stocks - earnings, fundamentals, relative valuation, risk and price momentum to generate standardized scores.

The whole logistics sector has seen a major shake-up in the last few years, right from tech aggregators who came into the scene with a promise to disrupt, challenges that Covid brought on the table to a phase where oil prices become a pain point for margins. After all the challenges, the sector has emerged stronger as some companies restructured their operations to stay profitable. There are many facts about the logistics industry which might surprise many. Just to mention a few, a metal major has such a large fleet of owned trucks that the unit itself can be listed as a separate company and probably would figure in the top 5 logistic companies. Last year at one point of time, the market cap of one single company was higher than the market cap of all the private sector companies put together and interestingly that company was in the red.

The stock market is very challenging at the moment, but if someone is willing to look at a one year time horizon, they can find good opportunities in the construction infrastructure space. Larsen & Toubro is a good example of a company that is going to benefit from this market trend. Other companies that are worth watching include Mahindra and Mahindra, JLR, and Mahindra Electric Vehicles.

At least 21 Indian companies with a market cap of over INR 5bn ($66m) saw their profits decline in each of the past four quarters and their stocks suffer negative returns in the last year, according to ET Markets. Five of the companies belong to the pharmaceutical sector, while three operate in specialty chemicals. Laxmi Organic Industries saw net profit fall by 37-66% YoY in the last four consecutive quarters, while Motilal Oswal Financial Services's profit fell 45% and 86% in the March and June quarters, respectively. Experts have recommended that investors focus on domestic sectors in the coming quarter while global growth remains lukewarm.

Stocks that have given stellar returns this year include Finolex Cables, Cigniti Technologies, Jindal Saw, Sonata Software, Sterling Tools, Nucleus Software Exports, Shilchar Technologies, and Goyal Aluminiums. These stocks have risen 50-85%.

The relentless selloff in India may be influenced by the situation in China, where there are rumors of further attempts to support their domestic stock markets. Some foreign investors may be tempted to switch their investments from India to the oversold and cheap Chinese equities. Despite short-term pressure on the financial sector, it offers fantastic opportunities for medium- to long-term investors. IT and healthcare sectors, viewed as more defensive, have been strong performers. India still presents a good longer-term investment story, although there may be some money flowing into China if it outperforms.

One change for making higher provision for unsecured loans and we see all the NBFC stocks tumbling. But four weeks later what is the situation, no one on the street is even talking about it and stocks have crossed the level when the announcement was made. The fact is that some regulatory measures are indicators of overall growth potential which the regulator is just trying to moderate in order to avoid overheating of some segment of industry. The other question is that an industry like NBFC which is bound to grow given the fact that capital was, is and will remain a scarce commodity, which are the benchmark which one should use to take exposure with a long term perspective.

Shareholders have had a remarkably good year. Forecasters have had a terrible one