MFs upbeat on IT, capital goods shares

Shares of information technology and capital goods companies are likely to be in the limelight next week, equity fund managers said today.

They expect the stock market to remain in the positive zone. Fund managers are bearish on the debt market and feel Reserve Bank of India's likely measures to squeeze liquidity will decide the direction.

A bond auction under the Market Stabilisation Scheme or a hike in banks' cash reserve ratio is likely on account of a surge in the liquidity. With no announcement about a hike banks' CRR, the 10-year benchmark government bond is likely to trade 10 basis points above the current level.

Jayesh Shroff, equity fund manager, SBI Mutual Fund, expects the equity market to remain in the positive zone next week in the absence of negative news and abundant liquidity in the market.

On Friday, the Sensex ended at 14570.75, up 26.29 points from Thursday. National Stock Exchange's Nifty closed at 4297.05, up 1.25 points. In May, foreign funds invested Rs 4574 crore in equities.

On sectors, R K Gupta, managing director, Taurus Mutual Fund, said information technology and capital goods stocks are the best bets. He feels the movement in bank stocks will be closely watched if there is a hike in CRR.

Despite the fall in IT stocks due to the rupee appreciating against the dollar, Gupta feels the fundamentals are intact in terms of growth and order book position, which makes these stocks attractive for investment.

The government's thrust on development of infrastructure have made funds to take a positive call on shares of companies making capital goods.