Credit Suisse (CS) has removed HCL Technologies from its portfolio of information technology models and replaced it with Tata Consultancy Services. According to the Swiss investment advisory firm, HCL Tech was phased out due to poor earnings review relative to its peers, and TCS added due to “TCS ‘short-term underperformance versus Infosys, with the P / E premium at the 30-month low, allowing TCS to catch up. “
However, CS maintained its “underweight” position in the information technology sector. “Our sector underweight is due to zero positions in Wipro, Tech Mahindra and now HCLT,” he said.
In addition, CS has also reduced its position from “overweight” to metals to “underweight”, as it believes that the current upward trend in demand is not structural and will not be sustained. “Metals inventories have a high book value over several years, which made risk-reward unfavorable,” the investment advisory firm said.
Among the metal pack, CS removed Tata Steel from its 30 stock portfolio and replaced it with Hindalco Industries.
Credit Suisse, however, has become “overweight” in the cement sector as it expects companies to benefit from lower global input costs, while prices are local. Despite short-term concerns, CS has added UltraTech Cement to its model portfolio due to its plans to expand capacity and reduce fixed costs.
Marico in, Nestlé outside
The investment advisory firm reduced Staples’ weighting to Marketweight from the overweight by replacing Nestlé India with Marico. The brokerage expects Marico to profit from the growth of new businesses.
Credit Suisse has also added Asian Paints to its model portfolio as it expects the pricing power to benefit the paint business due to the normalization of petrochemical prices and falling costs. .
The brokerage remained “underweight” on NBFCs and removed Bajaj Finance from its model portfolio. In addition, it remained “underweight” in insurance companies and in the telecommunications, utilities and energy sectors.
Specific to actions in the pharmaceutical industry
Credit Suisse prefers to be specific to stocks in the healthcare sector and favors companies such as Dr Reddy’s Laboratories and Aurobindo Pharma, which are beneficiaries of Covid-19 drugs, vaccine distribution and have a better pipeline in the United States. .
Brokerage continues to remain “overweight” in industrials (capital goods and engineering) as it expects operational performance to improve in the future. He also kept his “overweight” to banks, which include private sector banks and the State Bank of India, as these stocks are the best coins on expectations of better-than-expected growth over the medium term.