Bullish on Infosys on back of revival in US growth: Tirthankar Patnaik

In a chat with ET Now, Dr Tirthankar Patnaik, Director, Strategist-Institutional Research, Religare Capital Markets Limited, shares his views on Infosys.

ET Now: What makes you bullish on Infosys?

Dr Tirthankar Patnaik: We are positive on the whole IT sector and therefore TCS and Infy. We are expecting US growth to revive. We took the last FOMC statement that they are upgrading the US growth guidance from 2.3-2.5% to a range of 2.5-2.8% very positively because it was followed by US.

The taper of about $10 billion, importantly amongst the voting is the new chairman of the Fed, Janet Yellen. So, we believe that the US taper is there to stay right now. We will not take a call on how accelerated it might be because if it does, that actually pushes the hypothesis even further that of two prongs.

Strong dollar strengthening could also lead to a price realisation perspective, so we remain positive on Infy, TCS from that perspective.

So the other part is from a portfolio perspective, who are major players that are there in the IT sector, we know that insurance companies have a limit of around 15%.

FIIs have bought IT. Domestic investors are loaded up with IT sector but insurance companies have this limit of 15% in their portfolios and if the recent IRDA guidelines do change, then most insurance companies would have asked for IT services as the sector wherein they would like to raise their guidance to 20%, so we see further upside on the IT space even from that perspective.

ET Now: Just to have a followup point there – 2013 has been a very strong year for IT and pharma, so on top of good 2013 you expect that IT and pharma will give a double digit return so that is a very high conviction call is not it?

Dr Tirthankar Patnaik: Market fundamentals are not tied to calendar years. The macro drivers that took IT and pharma to such levels continue to work forward right now.

When we see and we are very keenly watchful of any turn that happens in the domestic macro, any clarity on inflation going forward and I am not talking about food inflation here.

We would be the first ones to actually turn around and push aggressively for financials and other rate cyclicals that have massively underperformed, I am just saying that at the moment we do not see any kind of change in the macro that will change our portfolio positioning.