Our stock market is continuing its uptrend and Nifty is now above the level of 10500. Even, Nifty has also crossed level of 10600 in recent days. Now, it is moving towards initial short-term target of 10850. In last few trading session, IT Stocks were the top contributors of this sustainability and improvement in Market Indexes. Infosys, TCS, HCL all have seen sharp buying in recent days. And thus today, I am going to especially add this topic and how investors can approach it now.
Indian IT with full of opportunities…..
In India, the Global sourcing market is one of the highest growing sectors which are continue to rise with a good pace. India remained world’s top sourcing destination in 2016-17 with a share of 55 per cent.
In past years, IT Industry had played an important role in transformation of our country. The IT industry has created significant demand in the Indian education sector, especially for engineering and computer science.
The public cloud services is also expected to grow with a CAGR of over 30 percent in future. The Indian Healthcare Information Technology (IT) market which is valued at US$ 1 billion is also expected to grow 1.5 times by 2020. India’s business to business (B2B) e-commerce market is expected to reach almost US$ 700 billion by 2020 whereas the business to consumer (B2C) e-commerce market is expected to reach about US$ 102 billion by 2020.
So overall, I believe the future of Indian IT Companies is great and they will have no. of opportunities in upcoming quarters and years. However, Leading IT firms like TCS, Infosys, HCL etc now have such kind of valuations where no other sector can give a competition to it. Also, due to lower growth rate in other sectors, IT sector looks fairly valued in market.
In last few quarters, we have not seen any special buying in IT stocks despite of consistent buying in other sectors. Perhaps, this sudden buying in IT sector is common to see. And therefore, I think the ongoing buying in IT stocks is less risky. However, I think the room for any big buying in IT sector is slightly small in short-term.
Although, I think profit booking at higher levels would be the best strategy to avoid any risk. I feel current buying in IT may stop anytime. For long-term investors, better choice is to invest in lower priced IT Stocks like Tech Mahindra. One can also go with HCL having greater no. of opportunities. But investing in Heavy weight stocks like Infosys and TCS could also be the good option if you have a view of more than 3 years.
Source of Information: Ibef.com
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