IT stocks are likely to perform “slightly better” in the current market scenario given potential US economic growth and a pickup in discretionary spending, according to Motilal Oswal Institutional Equities’ Head of Research, Gautam Duggad.
Talking to NDTV Profit, Duggad said in a market that is undergoing consistent correction over the past few weeks, large caps are “far more attractive” than mid- and small-cap stocks.
“Today, we have a 76% allocation to large caps. Given the moderating growth, we have gone back to banks. We have only ICICI Bank with a big over-it stance. But the sector that looks slightly more promising in today’s context is IT, both on a top-down and a bottom-up basis,” he said.
“Top-down because US growth will start getting more and more prominence under Trump. We have seen commentaries for the last two months indicating that there is some pickup in discretionary spending,” Duggad explained.
The top executive also shared his top picks within the IT sector.
“We have positioned LTIM as our top idea for the calendar year 2025. There are about 10 to 12 stocks from different sectors that our team has already released as 2025 top ideas,” he shared.
“We have replaced Persistent, which has done exceedingly well since we added it in October, with LTIM. And we continue to like Coforge in the mid-cap space. So those are the two top ideas that we have in the IT space,” Duggad added.
Another sector that Motilal Oswal finds “promising” is pharma.
“This will be the seventh consecutive quarter of 15% plus earnings. And even for the ongoing financial year, our analyst is pencilling in about 18 to 20% growth. There too, we have a big overweight stance with names like Sun Pharma,” the Motilal Oswal executive said.
Duggad’s third pick in terms of sectors is electronics manufacturing services.
“This is a quarter where we are expecting more than 100% earnings growth (in EMS). Our expectations for the next two years are also 50% plus earnings. We have Dixon in our model portfolio,” he said.
Within consumer discretion, Motilal Oswal has replaced Zomato with Trent.
“We continue to have Indian Hotels, Titan, Metro, and Page Industries. We have a lot of names in the discretionary consumption space.
The broking also has overweight ratings on telecom, real estate, and capital goods, Duggad said.
. Read more on Business by NDTV Profit.IT looks slightly promising in today’s context given potential US economic growth and a pickup in discretionary spending, Duggad said. Read MoreBusiness, Markets, Notifications
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