IT stocks need to consolidate to move ahead: B P Singh

In a chat with ET Now, BP Singh, Executive Director & CIO-Equities, Pramerica Mutual Fund shares his views on IT sector.

ET Now: IT companies have delivered, the management commentary is strong, discretionary spending is picking up, so despite a rosy environment why are IT stocks down?

BP Singh: There are couple of reasons, one, obviously they did very well in the last few months, so the portfolios are sitting on huge profit and a little bit of concern here and there is an excuse to book profit.

Now once the US government shutdown over the immigration bill has again become a reality and people has started talking about it whether it will be introduced and it move ahead from here onwards.

Simultaneously the US growth numbers are not appearing as strong as they were say couple of months ago, so keeping these facts in mind those who are sitting on profit, they are booking partial profit. However, in our opinion the factors which helped this particular sector is that we do not see US economy actually slowing down so much. In fact in our opinion it is bouncing back reasonably well.

The global PMIs have started coming up and so you will see a good trend as far as this sector is concerned and the last and the most important thing is that we believe that if you take medium to long term view the Indian currency is actually set for a depreciation from here onwards.

All these factors actually are positive for IT but in the short term the stocks are correcting and in fact we have also booked little bit of trading profits simply because the stocks have run up well and they need to consolidate in order to move ahead.