Markets have once again edged closer to a lifetime high with the rally in the last few weeks being led by the banking space. This was largely after the re-capitalization of PSU banks announced by the government. However, it maybe time to change the portfolio composition.
Banking stocks may have run their course
Most banking stocks including the likes of ICICI Bank, State Bank and PNB are near 52-week highs. Markets are already factoring in the recapitalization move by the government. The finer contours are not clear. This means, if a select PSU gets less capital than anticipated, we could see a dip in these stocks. The best mantra has always been to sell on rallies. So, it maybe just about time to sell and take some profits in banking shares.
Pharma shares may offer opportunities
Higher allocation to defensives like pharma may now pay in the more longer run. Pharma stocks like Lupin and Glenmark have dropped to 52-week lows and may hence offer opportunities. With the general elections just 18 months from now, media stocks may also attract buying in the next few months. Some stocks like Hindustan Media Ventures, which run the largest circulated newspaper "Hindustan", maybe good bets from a one-year perspective. The few stocks mentioned above are mostly near their 52-week lows. Making money now, largely depend on ones ability to buy low and sell high.
IT stocks to maybe good bets
IT stocks maybe good bets for a number of reasons. The first is that it is highly possible that the rupee would depreciate from here on. It is also likely that we also see strong growth rates in the US, which should benefit the larger and the more smaller companies.
There is a possibility that we would continue to see good growth rates for the IT sector going forward and valuations are not too high.
No much value elsewhere
There is hardly any value left in small, mid cap and also banking stocks. The chances of making money buying at these levels is minimal. Investors would do well to adopt a strategy of sell on rallies. In fact, many analysts now believe that 2018 may not be a great year, given the serious possibility of interest rates hike around the globe. The best mantra now would be a sell on rallies strategy.