Shankar Sharma of First Global picks IT sector to weather another wave of coronavirus, bets on pharma, commodities as well

Shankar Sharma, Vice-chairman and Joint MD of First Global, believes the IT sector is a good space to be in amid the second and possibly a third wave of coronavirus. In the first wave, business picked up and costs reduced for IT firms. Sharma expects history to repeat.

"IT looks like a very good place. There are many mid-cap IT companies that look very good. They have benefited from COVID-19 last year because of reduced costs and strong business," said Sharma in an interview with Moneycontrol.

Sharma is positive on mid-cap IT stocks.

"Mid-cap IT has come into its own. You've seen stocks like Happiest Mind, which we own. As a disclosure, we bought that just after the IPO when it didn't have a very great start. It has been nearly a five bagger now from that price in a matter of few months," Sharma said.

Other than IT, Sharma finds pharma, metals and commodities also attractive.

"Pharma has been an area that looks great. And metals, commodities, they are another great space to be in. Right now if things change, we will change. So, this is not investment advice. Please do your own research. But with that caveat, we like these spaces right now," said Sharma.

The Indian IT space has been shining since 2020 as the coronavirus outbreak has accelerated the pace of digitisation and increased our dependence on technology.

Read more: Inflation biggest risk to the market, can derail the bull run, says Shankar Sharma

Barring a few, IT heavyweights reported healthy quarterly earnings in FY21. Brokerage firm HDFC Securities pointed out that over the past year, the IT index’s re-rating (16 times to 23 times) and performance has been supported by the increase in consensus earnings estimate of 20 and 30 percent for tier-1 and mid-tier companies.

Read more: Brokerages positive on IT sector; TCS, Infosys, HCL Tech among top picks

Manish Sonthalia, Head Equities - PMS, Motilal Oswal Asset Management Company told Moneycontrol that the spending on digital, the growth in hyperscalers, the large transformational deal sizes are pointing towards growth in IT beyond FY22, FY23 and FY24.

Read the full interview here

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