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Friday, December 9, 2022

IT sector: Still to avoid or bottom-fish?

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

September 23, 2022 / 09:41 AM IST

(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…





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