“For the first time in 26-27 years, I have zero allocation in IT stocks,” Samir Arora has said.
The startling revelation was made by the founder and fund manager at Helios Capital during the Samvat 2079 Roundtable organised by Moneycontrol and hosted by N Mahalakshmi.
“For the first five-six months of the new year, I have basically reduced IT allocation to zero. I’ll wait for a few months and then see how it goes. The sector may not be bad but I don’t think it will outperform my other sectors,” he said.
The Nifty IT index is down 26 percent in 2022, so far, as investors and analysts believe the looming recession in the US and the UK, which are major markets for the Indian IT services firm, would mean companies cutting back on IT spending. It would hit earnings growth of Indian companies.
IT bellwether TCS is down 17 percent, Infosys is down 19 percent and Wipro has already tumbled 46 percent this calendar year.
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The US and Europe together contributed around 86 percent to Indian IT firms’ revenues in FY22, according to ratings agency CRISIL.
Arora, however, continues to be bullish on private sector financials, consumer and the export theme, which constitutes pharma and specialty chemicals.
“In consumer, my stocks are mostly those which I hope will grow at more than 20 percent. They are catering to low-ticket consumers and are for the middle-class population of the country,” he said.
Also read: Samvat 2079 Roundtable: Is the 'US market over' or are we repeating a mistake?
Earlier in the year, Arora’s Helios Capital bought shares of ITC, Lemon Tree, Vedanta Fashions and Campus Shoes.
Sunil Singhania of Abakkus Asset Manager, however, remains positive on the IT sector. IT in India is very different from IT in Nasdaq, he said.
“India provides value added IT services to the world. IT sector in India has never de-grown in volume terms. There might be fears about de-growth now but September numbers have been phenomenal. The order book has, in fact, gone up for IT companies,” Singhania said during the round table.
TCS’ order book for the July-September quarter stood at $8.1 billion, while HCL Tech’s grew 6 percent YoY to $2.38 billion in Q2.
“I think we are the market leaders as far as the back office or IT services are concerned. These companies are also going to benefit from the recent rupee depreciation tailwind,” he said.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.
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