Correction in midcap IT provides a good entry point: Nilesh Shah

Nilesh Shah of Envision Capital views the recent correction in the midcap IT space as a good opportunity to enter, especially to investors who didn't have a good measure of investment in IT. In an interview to CNBC-TV18, he said: "Some of the Tier-II companies, which essentially are doing extreme cutting edge work, will see higher growth rates over the course of the next 2-3 years."

His remarks come at a time when the IT sector has taken a backseat in 2022 so far, after outperforming the market for much of 2021.

One sector that has largely remained insulated from the fallout from the COVID-19 pandemic is the IT space. It has only grown exponentially, as companies spearheaded the much-needed scale-up while riding the digital wave.

The current quarterly earnings season has been a mixed bag for the sector, with IT behemoths like TCS, Infosys and HCL Tech largely exceeding Street expectations on the revenue front. However, margins felt squeezed for most of the companies owing to wage inflation and attrition.

However, this hasn’t deterred Shah the slightest from the IT space. He is of the view that the sector looks promising for the next 2-3 years. “Maybe 2-3 quarters will still continue to be challenging for the IT pack,” he added.