Expect decent order inflows for IT stocks in 2014: BP Singh, Pramerica Mutual Fund

In a chat with ET Now, BP Singh, ED & CIO-Equities, Pramerica Mutual Fund, shares his views on the IT space. Excerpt:

ET Now: IT has been charging ahead ever since the FED decision came out. With the US growth is picking up, will the Indian IT would do well too?

BP Singh: The depreciation of the currency has stemmed. The global market economies are now stabilising; that is the time when the pressure on the corporates to improve profitability is high. That is where the cost cutting measures take place and where the outsourcing of a lot of work becomes an important thing.

We are expecting a decent order flows in favour of the IT companies.

If you see the cost for Indian IT companies are two: one, is the lease rentals which they pay because of the space which they occupy in the economy and on the salaries. On both of these, you see that there is a pressure. Lease rentals are coming down and the expectations of the salary hikes are moderating in view of the slowdown in the Indian economy.

If you see, there is a cost improvement, there is an order inflow and at the same time, there is a currency depreciation.

Hence, the sector is in a very sweet spot and we will continue to see margin enhancements in the coming quarters. That makes us positive on this particular sector.