Geopolitical tensions over the Russia-Ukraine crisis and a sooner-than-expected liftoff have sent the stock market in a tizzy lately. At such a time, several market experts believe that Information Technology (IT) is the sector to stay heavily invested in given the recent correction and strong demand outlook.
The recent correction has eliminated some of the valuation frothiness in the sector, said Nirav Karkera, Head of Research, Fisdom. From a demand, investment and earnings perspective, he believes technology stocks are in a multi-year expansionary cycle.
“From a long term point of view, it makes complete sense to invest in technology stocks. With the structural story still intact and digitisation being a key driver, IT stocks are in the buy zone,” he added.
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Technology stocks are no longer a mere defensive play but will actively contribute as a growth counter over a period, Karkera pointed out.
Nifty IT has fallen 10 percent in the past 30 days whereas the benchmark Nifty50 is down nearly 5 percent.
Stocks such as Tata Consultancy Services, HCL Technologies, Wipro, Tech Mahindra, Infosys, Coforge, Mindtree and L&T Technology Services, Larsen & Toubro Infotech have slumped about 5-20 percent in the past 30 days.
Purvesh Shelatkar, Head of Institutional Broking, Monarch Networth Capital, has a conservative approach and prefers low hanging fruits like TCS, Wipro and HCL Technologies.
When asked about his penchant for stocks in the midcap space, Shelatkar said he likes Birlasoft, Newgen Software Technologies and Zensar Technologies.
Major IT firms raising their revenue guidance indicated a strong demand environment which has boosted confidence for IT stocks, said Shelatkar. Further, the growing trend of digitisation has fuelled the outlook for technology companies, he said.
A similar opinion was expressed by Richard Harris, Chief Executive Officer at Port Shelter Investment Management. He told CNBC-TV18 that now is the right time to invest in the technology space considering the sector's "inherent value" as one of the reasons.
Some technical analysts have listed out a few stocks that have the potential to generate strong returns in the coming months:
KPIT Technologies | Buy with a target price of Rs 800 and a stop loss of Rs 490 for 3-4 months (Arpan Shah, Senior Research Analyst at Monarch Networth Capital) (Image: Company website)
Tata Elxsi | Buy with a target price of Rs 8000 and a stop loss of Rs 6,490 for 3-4 months (Arpan Shah, Senior Research Analyst at Monarch Networth Capital)
Happiest Minds Technologies | Buy with a target price of Rs 1,350-1,500 and a stop loss of Rs 880 for 3-4 months (Arpan Shah, Senior Research Analyst at Monarch Networth Capital)
Wipro | Buy with a target price of Rs 635-680 and a stop loss of Rs 525 for 1-2 months (Kkunal Parar, Vice President-Research, Choice Broking)
Tech Mahindra | Buy with a target price of Rs 1,650-1,750 and a stop loss of Rs 1,360 for 1-2 months (Kkunal Parar, Vice President-Research, Choice Broking)
L&T Technology Services | Buy with a target price of Rs 5,400-5,800 and a stop loss of Rs 4,250 for 1-2 months (Kkunal Parar, Vice President-Research, Choice Broking)Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
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