Overweight on technology sector, says Prabhat Awasthi

Prabhat Awasthi, head of equity research & MD at India - Nomura Financial Advisory & Sec is overweight on technology sector. According to him, if there is any recovery globally then there will be some flow through into Indian IT which will ultimately flow into in numbers.

Awasthi told CNBC-TV18, “IT earnings have been a big disappointment. In the companies which have performed, there has been no massive upgrade or anything positive from the deals flow perspective. It is important to recognise that a part of that is probably priced in. In the beginning of the year we had an overweight position on the IT sector. Event after the fall, the sector was outperforming but a lot of out performance has been given away.”
He further added, “From valuation prospective, excluding TCS, the sector is trading at a discount to the market. Even if TCS is included, the valuation premium which is at 20-25 percent at the peak this year has fallen to about six percent.”
“There has been a huge amount of correction and lot of bad news is priced in. We are still advising investors to keep the faith and have an overweight on the sector primarily because if there is any recovery globally then there will be some flow through into Indian IT which will ultimately flow into in numbers. Valuations are building in fairly dismal performance going forward,” Awasthi added.