Expect IT sector to outperform: Shah

Nilesh Shah - MD & CEO, ECR, Envision Capital feels the IT sector still has a strong chance to outperform.

Shah told CNBC-TV18, "That is likely to be the trade for a few more quarters. While valuations are attractive on the IT side and given that the sector is likely to come out of a sluggish spending in the developed markets on technology, it is quite possible that IT still has a strong chance to outperform. This is given that its valuations are still at a discount to the broader market. I believe that IT is likely to be the big sector where a lot of liquidity will flow in." He further said, "Pharma valuations are not expensive and one might still see liquidity getting allocated to it. I believe that on the consumer side, it is fairly overstretched. We have seen some of the consumer names crack significantly, for example, stocks like HUL, Tata Global Beverages, where valuations over stretched themselves. There have been corrections so, I am not quite sure that consumer is the place to hide in given that valuations have become frothy. A lot of the growth which companies have been showing in the consumer space has come in largely from inorganic initiatives or geographical expansion outside India getting into markets like Latin America and Africa." "IT and pharma is an important pack where one could see pockets of outperformance. I believe that oil and gas has a chance to outperform. However, given the political development in the last 24 hours, I am not quite sure how easy it is going to be continuously hike diesel prices. The outcome could be a very constructive gas pricing policy and it is quite possible therefore that oil and gas too could contribute to outperformance," Shah added.