Wait and watch! Don’t jump the gun on Indian IT companies: Sampath Reddy
Sampath Reddy, Founder & CIO, Azurean Investment Managers, says generally speaking the domestic institutions are a lot more bottom-up in terms of investing style and they do have a lot of exposure to the mid and smallcap segment. A continuous positive inflows into the domestic institutions is helping the valuations of mid and smallcap companies. That is why the mid and smallcaps are still relatively expensive.
Reddy also says he would not be very optimistic about the way things will pan out when the new US president takes over. He will probably wait and see whether the order books or the new large orders are coming through for the IT services companies.
We have seen an uptick in sentiment in IT stocks since the US election. Is it likely to convert into earnings as well?
Sampath Reddy: At this moment, most of the analysts are of the opinion that with the expectation of the tax cuts by the new president, there is a possibility that corporates might spend more on the IT side, I think that is what is leading to that optimism. But with the way the commentary has been, I am not sure where the earnings have come for the Q2 numbers. The momentum is mostly waning away. The growth rates are below the expectations for Q2. At this juncture, I would not be very optimistic about the way things will pan out when the new president takes over.
We will probably wait and see whether the order books or the new large orders are coming through the IT services companies. It is better to wait and watch than jump the gun and see how the
