Barring HCL Tech, large cap IT space remains underweight: Ambit Capital

In an interview with ET Now, Saurabh Mukherjea, CEO, Institutional Equities, Ambit Capital, shares his views on large cap IT stocks. Excerpt:

ET Now: Large cap IT continues to move up. What is your stand on it?

Saurabh Mukherjea: HCL Tech has been our favourite amongst the large cap IT stocks for a long time. Beyond that, it is difficult to argue a strong bull case for IT, given the valuations of the sector and given that growth and demand for the west would not pick up in the manner that the market is expecting.

You had Accenture giving its forward guidance and they have guided towards a weak single digit growth. Accenture does not see a dramatic pick up in discretionary IT spends. If a leading player like Accenture does not see a pick up, I do not understand where the markets optimism on a company like Infosys is coming through.

Hence, HCL Tech remains our top pick and in the IT space, we remain underweight. The rupee devaluation-driven surge in IT will go down in history as a high watermark for IT in this stock market cycle.