FPIs pumped Rs 7,000 crore in IT stocks in Q2. Time to follow smart money?
Nine out of 10 Nifty IT index constituents managed to beat the benchmark Nifty50, which rose 2.3% in Q2. LTIMindtree, the latest addition to the 50-pack Nifty, was the only laggard, but it, too, managed to remain in the green.
Sonam Srivastava, founder and fund manager at Wright Research, said the resurgence in Nifty IT stocks is influenced by several factors.
«Firstly, the global IT sector is poised for a 4.1% growth in 2023, as per Gartner's predictions. This growth is propelled by the rising demand for digital transformation, cloud services, and cybersecurity.
Secondly, the current P/E ratio of Nifty IT stocks stands at approximately 18x, notably lower than its historical average of 20x, making it an attractive proposition for investors,» Srivastava told ETMarkets.com.
The consistent FII inflows into the IT sector over the past 2.5 months indicate foreign investors' confidence in the sector's long-term potential, she added.
After remaining net sellers from April to June, FIIs have poured in Rs 7,101 crore from July till September 15, at a time when management commentary and guidance from IT majors painted a stark picture for the sector, show NSDL data.
IT also has a tailwind of a weak rupee, and most of the headwinds regarding bonds and others are getting slowly priced in, said Sanjiv Bhasin, Director, IIFL Securities. «One cannot have bond yields at this rate and stocks where they are.
