IT sector: Still to avoid or bottom-fish?

Valuation of IT stocks is now close to pre-pandemic levels, but investors have to be selective as recovery could be protracted

Madhuchanda Dey
September 23, 2022 / 09:41 AM IST
IT sector: Still to avoid or bottom-fish?

(Representational image)

PRO Only Highlights
-  Quarterly performance largely backed by improved realisations
-  Medium-term triggers China plus and protectionist measures for tyre industry
-  Valuations not inexpensive; but improved medium-term outlook

Highlights IT stocks are highly correlated to movement in US indices Fed turning increasingly hawkish Accenture sounds reassuring; mixed signals otherwise with several sectors giving recession warnings Tech spending may slow down for few quarters, long-term trend intact IT stocks have corrected significantly, close to pre-pandemic valuation Be very selective on large-caps, recovery may be protracted Nimble footed mid-caps better placed, add very gradually The overriding sentiment in the global equity market is of fear in the face of the  continued hawkish stance by global central banks...