Anand Radhakrishnan, Sr. VP & Portfolio Manager at Franklin Equity told CNBC-TV18, "The IT sector is going through some kind of cyclical recovery. The US and European economies are recovering and because of that we are seeing uptick in demand. More importantly the corporates are sitting at record high profitability whether it is in US or in Europe. So, their willingness to spend on the technology area is increasing."
He further added, "In the last five years we have seen them curtail their spending as a percentage of sales and that we are expecting to improve. So the near term trend seems to be suggesting uptick in terms of bigger picture, but at the same time we are also seeing increasing competitiveness within that space and a trend towards more commoditisation there."
"So, there are going to be demand drivers as well as margin compressors within that sector. One needs to play that game little carefully. Given the recent outperformance of the sector, I would like to be little more cautious," Radhakrishnan said.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
