Be selective while picking tech stocks, say analysts

Some of the IT stocks have fallen up to 29% in 2016 so far with the BSE IT index falling 2.67% in the same period. The index, though, has surged 5.11% in the post-Budget rally that market witnessed in March. Analysts say the technological disruption in the space and a relative slowdown in discretionary spend in BFSI and pharma will lead to IT stocks taking a backseat for some time.

What’s the Way Ahead? Mahesh Patil, Co-CIO, Birla Sunlife MF sees the industry’s top line and volume growth moderating in the near future. At last count, IT stocks were underowned by 17 out of top 20 mutual funds, a Motilal Oswal Securities report showed.

Investment Mantra Harsha Upadhyaya of Kotak AMC said investors “need to be little more stockspecific within the sector.” Dipen Sheth of HDFC Securities sees the space undergoing a transformational shift in the coming few years. “Within IT, you will have to do the slicing and dicing and figure out which ones are better placed over the next few years,” he said.