IT offers decent value, will continue to move higher: Gaurav Mehta

In a chat with ET Now, Gaurav Mehta, VP, Institutional Equities, Ambit Capital shares his views on the IT space.

ET Now: Is IT moving up because of weakness in rupee or is there reason to buy into IT?

Gaurav Mehta: The reason for IT's underperformance over the last three to five months has to do with rupee, but generally, it has been about the entire shift from cyclicals to defensives.

According to us, IT is not a traditional defensive. It is not a sector that does not disproportionately benefit if there is a recovery. Indian recovery is hugely linked to global recoveries. There is the earnings support. Value is the single most important factor that delivers in a bull market.

If you were to run a top down screen on the pockets of market currently offering value, apart from the traditional cyclicals, IT is one of the only sectors from the three considered traditional sectors - pharma, FMCG and tech.

Tech is the only sector that is offering decent value at this point in time. There is significant value versus the rest of the traditional and conventional defensive peers. The downsides will significantly be supported for IT and it should continue moving higher.

The initial rotation trade out of defensives into cyclicals has happened. Now people will become a lot more stock and sector specific and IT from that point of view stands out. We would expect it to continue moving higher.