5 stocks to bet on in pharma and defence: Rahul Shah

In IT, I would advise clients to book profit for the near term and maybe look for opportunities later, says Rahul Shah, VP-Equity Advisory, Motilal Oswal Financial Services.

What is your take regarding the weakness in the IT pack? Is this near term pressure and opportunity to buy for a long-term investment or would you say that there will be better pricing opportunity?The IT stocks have done quite well in last one month or so and it looks like before results, investors would like to take some profit on that. In fact, we have some profit booking in all the largecap IT stocks. My view is one should look at booking profits at these levels. However, the sector remains very positive. The earnings trajectory for the next one year should be very strong for the IT companies.

But initially, there could be some downward momentum post numbers and most important, in terms of the management commentary coming up in most IT companies. I would advise clients to book profit for the near term and maybe look for opportunities later.

What is your take regarding the defence pack? In the last two weeks we have seen a big bounce back in defence stocks like Bharat Dynamics, Hindustan Aeronautics. A CLSA note is talking about how we might be looking at a complete turnaround of the sector. Is this the right time to look at it from a long-term investment point of view?Most of the defence companies are from the PSU pack and we are seeing re-rating in most of the PSU pack. So, one of the reasons for the bounceback is also that. If I look at companies like BEL, BDL, HAL, all have been on fire since last month or so and obviously the order inflow has supported them.