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We are seeing that a lot of volatility has kicked in the past couple of weeks, but once again the cheer is back and it is the largecap space as well as broader markets that are seeing participating. With the election in a couple of months from now, how are you placing your bets? Are you still holding on to your ideas in the small and the midcap space?
Jitendra Sriram: Overall, we are quite positive on markets. The markets are currently trading at somewhere around less than 20 times March ‘25 earnings, which is just in line with what we have seen in our historical trends. It is neither too expensive nor in too much of a value zone. We think the markets will continue to track earning growth which seems to be quite robust.
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There is a tailwind, a combination of strong economic growth, inflation is in RBI’s comfort corridor. Overall there is a very high likelihood of a policy continuity as well. All these factors actually provide good tailwinds for the market. We continue to be quite optimistic. Obviously, the 45-50% growth that we saw in the SMID space may be difficult to replicate in the current year. But I am sure that overall the space will do well and might consolidate for a quarter or two before it resumes its upwards journey.
We see that in your largecap stocks, a lot of IT counters are also making the list. What is your take on the IT space as of now because a bit of an underperformance is what we have seen in the IT sector and given the Accenture results, we are going to kickstart the earning season in a short while. Do you have any big hopes from the IT space or do you believe the sector has bottomed out and all these stocks can outperform in the times ahead?
Jitendra Sriram: In the IT space, last year was a little cautious and we were keeping our overall stance on IT more as an underweight at that point of time. By and large, we were more underweight in global facing sectors given the kind of lag effect of a tighter monetary policy there and we were more overweight domestic facing sectors as such.
But what has happened is that after the 3Q results came out in early January, the commentary seems to be indicating a basing out effect, a lot more furloughs were there in the third quarter. Now management commentary seems to be indicating that you may have a slow but a gradual recovery coming through in the IT space and that is what is prompting us to cut our underweights now. So, the magnitude of underweight that we are running on the tech space as such has definitely dropped from where we were say three-six months back and we have been constantly reducing that magnitude of underweight that we had on that space.
The new addition in your portfolio is Juniper Hotels, one of the recent listings. Post the listing the stock has once again reclaimed to the listing price. But we know that you enter in the long-term bets. Why do you like this counter and what is your long-term view on this stock?
Jitendra Sriram: We have been quite positive on the hospitality sector. We are seeing a combination of rates moving up which is the average daily rates of the hotels, plus there has been a utilisation perk up across the hotel industry which is proving to be a tailwind for all the hotel stocks as such. Further, we are still in a situation where foreign tourist arrivals into the Indian hotel industry are still nowhere near the pre-Covid peaks. So, you still got a tailwind that as businesses normalises, we will see that perk up coming through on the hospitality sector as such. That is main reason why we have taken up the stock when IPO flotation came up.
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