So, two baskets to be made very clear in this entire PSU basket as a whole, one is obviously your PSU banks.

What we feel that PSU basket holds the topmost allocation as a PSU as a whole PSU banks earnings if we look at it last three-four year versus the earnings which they reported this quarter, most of the banks reported very strong earnings in terms of asset quality, in terms of if we look at NIMs or in terms of any other area and growth if we talk about. So, most of the banks reported strong earnings in PSU pack, so that obviously requires that one should have a good allocation. Second comes, a lot of power financiers and power as a sector. Stocks like REC and PFC, again, reasonably valued with a good dividend yield, with a good 18% to 20% growth what they have been talking about and the sector is poised and the power financiers will definitely do well in next at least two years or so from here and with the visibility of earnings.

So, again, that gives us a sector where one should look at. And thirdly, obviously, select pack of metals and all and so on and on, one should look at it. And we feel that the PSU as a whole should continue to do well.
What are your thoughts on Federal Bank? I mean, everyone acknowledged that it was cheap, but the big turn for Federal Bank has come ever since the new management has taken over.
Rahul Shah: So, obviously, the stock has been, as you rightly pointed out, it is at all-time high and if we look at this last quarter’s numbers also, numbers were also pretty strong. So, my sense is, whenever we see a strong management and a strong, in terms of numbers, sooner or later the markets give the valuation. So, Federal is one of them and we also continue to like Federal from current levels as well. So, we feel that there could be another 20% upside more from the current levels in Federal Bank.

Meantime, we were just discussing this a short while ago this comparison of Swiggy versus Zomato and in light of that, there is a new report from UBS and they are saying that Swiggy is well-placed for growth at a 35% discount as compared to Zomato and talking about encouraging signs when it comes to quick commerce. How do you think investors should play into this space?
Rahul Shah: So, if we look at it and what is market looking at it and where the markets are putting money is most important. So, wherever you have this new-edge platform stocks, people are just putting their money and the valuations have just been created in terms of the price appreciation.

So, if we look at Swiggy versus Zomato, yes, Swiggy trades at discount and on the other hand with the Zomato with the strong earnings and the strong turnaround with all the pockets they have been doing quite well.

So, my sense, both the stocks should do well, Zomato versus Swiggy and obviously, the preference will be more on the Zomato with more visibility of earnings versus Swiggy, which has been a recent listing. So, I think both will do well, but the earnings in terms of way both will compound, both of them will compound at 15% to 18% from here, so big money to be made in any correction as I think both the stocks one should look at investing.

Curious as to where you stand, what is the pecking order when it comes to some of these players?
Rahul Shah: So, if we look at the Q2 earnings, most of the IT companies fared well and the demand came back in most of the IT midcap names which was very clear and we have seen that most of the midcaps IT names have been near to their 52 weeks.

And if we look at, again, once the demand is there and the earnings reported of most of the IT companies were good, so this will continue. So, my sense, midcap IT names will continue to do well better than the largecaps.
Obviously, the largecaps have the better valuation matrix right now in terms of the midcaps. So, the mixed bag, if I have to give you an order, I think Coforge remains our top bet, followed by Tech Mahindra, HCL Tech, and TCS. So, these are the mix of large and mid IT names what we have been liking.

Progressively from here, after the correction, give us a list of two-three stocks or maybe one largecap, one midcap, maybe two midcaps where you think that 2025 could be a year of double-digit returns.
Rahul Shah: So, if we look at two-three stocks in the largecap space, obviously largecap offers a lot of room and comfort versus the midcaps. Now, after the recent correction, the largecap still offers valuation comfort. So, in largecaps obviously the clear winner we discussed was financials. And in financials, we continue to like State Bank of India, so there could be a double-digit return from here. Auto, which has a very fantastic this year and it looks like that going forward also in auto there will be more of a stock specific.

So, if I look at Mahindra & Mahindra, so Mahindra & Mahindra also had a decent correction, strong numbers of Q2 and it looks like, again, going to be a robust kharif season and good monsoon as well. So, I think M&M could also be a good play. And thirdly metals play. I think metals had a washout in a lot of stocks but I think Hindalco amongst them had decent numbers. So, I think these are the list of three stocks that we continue to like from here.