Structural tailwinds will aid IT companies and IT stocks, says Vinay Khattar

In a chat with ET Now, Vinay Khattar, Head Research (Individual Clients), Edelweiss Financial Services Limited shares his views.

ET Now: IT has made a bit of a comeback today one so as some of the other defensives, is it that phase wherein after the initial euphoria investors would turn back to quality because that is available slight bit of discount are you sensing that in declines you are advising that and two of course a word on Infosys in particular ahead of the AGM it has certainly shot up?

Vinay Khattar: Let us just break it up into quality in defensives. IT is a clear defensive play and with the kind of performance that we have seen on cyclical and non-defensive segment that is non-IT, non-pharma, non-FMCG segment, we have seen a tremendous amount of pick up on the midcap, small cap and even the large caps being played out.

So could there be a certain degree of catch up which IT may do, possible yes, and are there some structural tailwinds which are there, yes of course you are seeing lot of pick up in US where 60-65% of IT companies revenues comes in two of the majors which is TCS and HCL, they have grown significantly in Europe almost 25%-30% plus kind of a growth.

Certain degree of structural tailwinds are there which would anyway aid IT companies and IT stocks. But having said that our overall sense continues to remain that we are at the early part of a long bull rally and in the bull markets aggressive will continue to outperform defensives in a very significant manner and that is what we will continue to see going forward.

Second big thought in terms of Infosys there has been lot of news in terms of the new management and the new CEO and probably that could be affecting stock but in the recent past you have seen the stock having anyway corrected quite a bit significantly. So probably there is some degree of a pickup which is playing out on Infosys and that is what we see in the prices.