In January, all the listed companies will declare their results for the quarter ending December 31, 2011. As always the earnings season will kick-off with Infosys.
In an interview to CNBC-TV18, Vikas Khemani of Edelweiss Securities says, IT results should be broadly in line with expectation. “I don’t see any sort of big disappointment coming,” he adds.
Also read: CLSA upgrades Infosys to 'outperform'
Below is the edited transcript of his interview with CNBC-TV18’s Mitali Mukherjee and Ekta Batra. Also watch the accompanying video.
Q: What are you making of the entire IT basket? We are going into earnings this month, how would you approach something like Infosys?
A: I think by and large the IT results should be broadly in line with expectation. Infosys has been managing expectation pretty well in terms of guiding it down. I don’t see any sort of big disappointment coming. Infact the rupee depreciation should help them only.
In my opinion, IT is the sector where most of the investors have been invested. Given the fact that most of the domestic sectors are struggling, IT will remain in interest. By and large, IT sector should guide well.
I don’t think there is any pessimistic view which will come from the IT sector. We will have to see how Infosys and others guide. So far TCS has been guiding well, Infosys has been guiding cautious. My sense is that they should give moderate guidance. That will keep the sector interest alive and going.
Q: What is your call on the auto space now? How would you approach the two wheelers in specific?
A: In the auto sector, we have seen some amount of slowdown in the demand. That was impending in a way because the rising interest rate slowing down, the demand slowing down, the growth had to reflect into these numbers.
Bajaj Auto has a good amount of balance between domestic as well as exports. Something like Bajaj Auto has most about 40% of export, the sales coming through exports. That provides you reasonably good amount of balance.
In our opinion, this year, given the rupee situation, which is likely to sustain around these levels, export oriented stories will remain solid and in interest. That is where players like Bajaj Auto will hold the key.
Domestic sales will slow down and you will see some amount of impact continuing for the next couple of months. I think we will see the reversal happen only after the monetary policy eases out.
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