Pankaj Pandey Bullish about Arvind Mashions and Trent while GST Cuts Boost Margins

The technology sector continued to dominate market discussions this week, while investors are bracing a flurry of updates from TOP -T companies. TCS starts the profit calendar, followed by management commentary and subsequent market reactions later in the week.

Speaking with et now, Pankaj Pandey, main research, icicidirect.com emphasized that the IT index saw a decrease of 20%, causing the valuations to push to four-year lows. “Some of the still ignored positives are, for example, we have a considerable amount of currency debit of Indian rupees versus euro of 11 odd percent to pounds. It is around 6.5 odd percent,” said Pandey. He added that these currency movements can relieve the margin pressure, but warned that the AI-led rally should settle in the global markets before a sustainable recovery in IT shares can take shape. “In terms of appreciation and price correction-wise risk-reward is better, but when the reward will come, we don’t know,” he noticed.

In the field of health care, optimism remains high because the sector continues to deliver strong updates. “In health care, what we like is the hospital as a space. Our feeling is that general hospitals can yield 17-18% a kind of growth in the next three-four year, largely because of the rising disposable income,” said Pandey. He pointed out that leading hospital chains are planning to add nearly 20,000 beds to their current capacity of around 46,000, and that organized players will probably get a market share. Under important choices, he mentioned Apollo Hospitals, HCG and Narayana Hrudeayalayas as preference wideas.

With regard to banking and financial services, Pandey constantly expressed confidence in both PSU and private banks. “On the PSU banks what we like SBI, then there came next to that Indian bank. Indian Bank also came out with a pretty good series of figures,” he said. He added that Bank of India has shown a stronger growth in the advance than the total system, and that margin pressure is already priced. According to Pandey, with FPIs, there can no longer be heavy sellers, “BFSI as a segment can improve and protect a lower levels in the Nifty.”

In the fashion retail segment, the momentum seems to be mixed as the competition increases. “In this fashion store space, Trent numbers are somewhat soft, although the basis was higher last year,” said Pandey. However, he remains optimistic about the growth in the second half, and mentions lower GST speeds as a key wind. “In addition to Trent, what we like is, Arvind Mashions, because for them 40% of the portfolio will benefit from this lower GST levels and our feeling is that we would see the margin repair for that company,” he added.

While the India Steam profit season is collecting, investors seem to weigh a valuation comfort, structural growth in health care, resilience in BFSI and recovery perspectives in fashion stores – all of which can determine the direction of the market in the coming weeks.