A Multi-sector Push: Mapping Nifty50's road to 20,000

economictimes.indiatimes.com:

“The risk versus reward ratio seems quite favorable for IT companies, particularly large cap firms. Stocks like TCS, trading at 18 times earnings for FY24, are quite appealing. The same holds true for HCLTech,” says Rahul Shah, Motilal Oswal Financial Services.

Edited excerpts:ET Now: We have to talk about the IT sector, which has been a hot topic recently. This week, the IT index performed remarkably well, posting its largest intraday gain since September 2020 on Friday. Do you believe that all the negatives have been priced in and investors are beginning to reevaluate the sector? Rahul Shah: Absolutely.

The performance of the three major large cap IT stocks that have reported earnings in the last two days — TCS, HCLTech, and Wipro — offers insights. There were no surprises or disappointments in their numbers, which met Street estimates. Despite this, their valuations still seem quite attractive.

We believe that the maximum pain for IT companies could persist for one more quarter, which is what the Street is currently factoring in. We've seen some allocation in the IT sector as a whole. Post-Q4 numbers, most IT companies, particularly in the midcap space, have shown decent performance, outperforming their large cap counterparts.

The positive response we're seeing post numbers appears to be a reaction to this performance. As we were also anticipating, post-Q2 numbers should be better and priced in. Therefore, the risk versus reward ratio seems quite favorable for IT companies, particularly large cap firms.

Stocks like TCS, trading at 18 times earnings for FY24, are quite appealing. The same holds true for HCLTech. The risk versus reward balance is quite favorable for IT companies, and they're definitely worth