These 2 blue-chip IT stocks are Macquarie’s top picks despite muted performance this year

The two IT majors TCS and Infosys are on the radar of Sandip Bhatia, Head – India Equities, Macquarie Capital Securities. In conversation with ET Now, the expert said that the investors should look to buying these stocks from the IT space on dips. The year hasn’t been great for the these two majors, as both of them have underperformed the equity benchmark Sensex by a huge margin. While TCS has returned a paltry 4.39% in the year, Infosys has given negative returns of 2.8% since January this year. According to Bhatia, the markets are still offering buying opportunities at every dip.

From the Infra space, Sandip Bhatia is betting on the major technology, engineering, construction and manufacturing conglomerate- Larsen and Toubro. The stock has outperformed the benchmark in the year with returns of more than 25%. Another expert, Porinju Veliyath is bullish on the prospects of this space. Porinju believes that there maybe a few L&Ts in the making. L&T has a market capitalisation of more than 1,64,000 crores. Speaking to BTVi early this month, he said, “ In the next 10 years, the infrastructure development in India is going to be a huge game changer. I’m looking at the next L&Ts”.

Sandip Bhatia believes that market is likely to remain range-bound to flat as earnings are yet to peak. He believes that the markets will not correct by more than 5% in the near term, and the consumption space provides an exciting opportunity. According to him, the steel sector is likely to see correction. Stocks such as Tata Steel from the space have returned more than 52% in the year so far, while the BSE Metal index is up by 25%.

HDFC Bank, YES Bank and ICICI Bank are his bets from the financial services space. HDFC Bank’s performance in the year has been impressive as the stock is up by 45% in the year. Despite such stellar returns, Sandip believes that the Bank’s stock is attractive at these levels. The S&P BSE Bankex is up by 31% since January this year.

Speaking about the refining space Sandip Bhatia said, “India has made a major move in terms of cutting subsidies and in fact now we have a daily movement of oil prices so we like IOCL which has seen good volume growth, also had bit of price correction so IOCL in the refining sector also look good. There are still pockets where the valuations are not as elevated as in some of the other sectors which have done very well for the last three to five years.”

Infosys Technologies Limited