Market: Deven Choksey discusses two sectors that could outperform the market in the future

“And if the crude oil prices “If oil prices remain low, then in such a situation, crude oil price derivatives, including the cost of energy and it being a raw material for metals, I think this is going to be directionally very positive,” says Deven Choksey, MD, DRChoksey FinServ Pvt. Ltd.

Do you think that is a challenge for Trent, which is living at a high standard of living? What would you recommend to people who are in Trent?
Deven Choksey: Well, my understanding of the issue is that currently most aspects about the business are fully priced in. When you look at the valuations, everything is expressed. So, from a valuation perspective, the stock is adequately covered in all aspects. However, having said that, it is important to note here that most of the funds that have been holding this stock for want of a second company available in their portfolio, are likely to remain limited to companies like DMart or Trent in the portfolio. Maybe some price softening will eventually happen, which could be the entry of Reliance Retail into the market. marketNow, if that particular situation does occur in reality, then in such a situation, one might see some moderation or correction in the existing e-commerce companies that are currently trading at quite a premium valuation at the moment.

Are there any new stocks, topics or sectors that you are following?
Deven Choksey: As for the direction we are going, we believe that the commodity sector will continue to outperform in the coming months. To a large extent, due to the fact that, on the one hand, crude oil prices remain low and there are promises that they will remain low. If there is a positive outcome on the war front between Russia and Ukraine, I think that will definitely bode well for further positive outcomes for crude oil prices.

And if crude oil prices remain low, then in such a situation, the derivatives of crude oil prices, including the cost of energy and the fact that it is a raw material for metals, I think this is going to be directionally very positive.

The second most important point as we move forward in the green hydrogen As a power, we believe that the metal goods It will have the inherent advantage of consuming the energy at a significantly lower cost with green hydrogen coming into play, which will be a bet for the next 5 to 10 years of course, but I think in the short term the market is also expected to factor that in.

So, on the raw materials side, including chemicals, we think times are likely to be better going forward. On the work-in-process side, I think expensive inventory has also been depleted and as a result, some of these companies appear to be relatively better positioned on margins for fiscal 2025.

Similarly, the view we have for the BFSI space in particular is that banks which have the capacity to acquire a larger amount of current deposits are relatively better positioned in comparison and that is where some of the corporate banking names, I think, are relatively better off.

Reduction in cost of funds will be an inherent advantage and will be a structural change for the next four to six quarters. Therefore, we believe that metal as a commodity, banking and financial segment including market intermediaries and insurance could be the best performers in the market going forward.

I also want to return to the point about the Nifty IT IndexWhile it is true that it hit that all-time high and the charts indicate a further rally, Kotak, as Anisha highlighted earlier, published a note on LTIM mental treeTata Elxsi, while for Tata Elxsi You are maintaining the sell option, the fair value you are setting at 5500. As for LTIMindtree, of course, you are extremely optimistic, you have upgraded the stock to “add”. Are you also spotting any opportunities within the IT sector?
Deven Choksey: Yes, I think so. We found some of the companies in a very interesting position. You mentioned Tata Elxsi, I would probably add something else. Tata TechnologiesThese companies have a distinct advantage in terms of their product and service offerings. A) They operate in a niche market. For example, Tata Technology, in the automotive sector and in the aviation sector, within the transportation segment, offers end-to-end solutions.

So obviously this particular company has a larger amount of business to talk about across both verticals, which will likely grow and grow systematically because there is a systematic approach, I think, towards the multiple technology segments that occur in the automotive sector as a whole, which is where this company is likely to see a roadmap for the next three to five years with a fair amount of clarity in execution as well.

Similarly for Tata Elxsi I think though automotive is a vertical that remains common between the two companies, the kind of services that they offer in the automotive sector compared to Tata Technology, Tata Elxsi also has a relatively different kind of roadmap to follow with four other verticals also positioned equally interestingly.

So, yes, we find that companies that have engineering and R&D along with the ability to deliver IT solutions, whether to manufacturing or to the consumer as a whole, are likely to have a relatively better time compared to their larger peers, which are likely to grow relatively slowly, 10% to 15% at best, whereas these companies could possibly grow 20% to 25% over the next three to five years.