Why Birla Sun Life Insurance Likes IT, Banking, Cement Stocks

IT stocks have strongly outperformed the broader markets over the last few months. As compared to a 6 per cent drop in Nifty in the past three months, the BSE IT index rose 7 per cent during the period. Despite their outperformance, Sashi Krishnan, chief investment officer (CIO) of Birla Sun Life Insurance, feels these stocks offer a good opportunity for investors at current levels.

"The IT theme will play out well over couple of months. We expect that there will be some devaluation of the rupee in the global situation where there is competitive devaluation," he said.

"More importantly, some growth is seen in services sector in both US and Europe. Some of the margin pressure that these IT companies faced like wage increases is behind them."

Mr Krishnan also likes banking and cement stocks, which he feels will benefit from a revival in investment cycle in the Indian economy. (Watch)

"We have got exposures to banks which are well poised to play the revival cycle. We also have exposure to some cement companies where valuations have fallen significantly," Mr Krishnan added.

Despite the real estate sector not doing well, the government's focus on the road sector will benefit cement companies, he said.

Outlook on Economy

Mr Krishnan sees growth returning to the Indian economy after it grew 7 per cent in the June quarter. The domestic economy this year will benefit from higher government spending and some revival in the urban consumption cycle, he said.

"The growth could come from both from government spending on investments - almost 2.5 lakh crore has gone into infra - and urban consumption cycle, which has started to kick in," he said. "We had 8 per cent wage growth. We had inflation at around 3.8 per cent, increasing disposable income that has gone into urban consumption."

"7.3-7.5 per cent growth in this current year and going up to 8 per cent next year is not a big challenge," Mr Krishnan added.Sourc: NDTV