InvestorQ : What do you suggest investors should do with IT stocks after the results of Infosys and TCS announced last week?
Dawn Cherian made post

What do you suggest investors should do with IT stocks after the results of Infosys and TCS announced last week?

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Mitali Bhutta answered.
1 month ago
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Here is what investors must follow as some ground rules while selecting IT stocks at current levels.

· Firstly, it does look like most of the positive tidings about IT are already in the price. However, not all the risks may be in the price. Hence, for large cap IT stocks, the risk-reward ratio appears to be unfavourable.

· Secondly, margin pressure is not going away in a hurry any time soon. That would mean most IT stocks would see gradual rationalization of ROE in the coming quarters as well as normalization of valuations in the coming quarters.

· The focus may shift largely to the niche mid-cap and small-cap players in the IT space. Most of them are even pure digital plays with a lot of valuation headroom left. Investors can look to tweak their portfolio mix of IT stocks accordingly.

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