IT stocks to underperform market; cyclicals look more attractive: Parag Thakkar

In a chat with ET Now, Parag Thakkar, Head Institutional Sales, HDFC Securities, shares his view on IT stocks.



ET Now: What is the sense on IT sector? Any particular name that you would want to discuss?

Parag Thakkar: First of all, I would like to say that the rupee trade is not that great for IT companies now. The domestic currency is set to depreciate against the US dollar.

ET Now: But should not this augur well for IT firms?.

Parag Thakkar: No. Rupee is not going to depreciate significantly. I do not see it depreciating too much. At time, when rupee is expected to depreciate, albiet limited, and dollar revenue growth of IT companies are seen falling, there remain outlook concerns. We are also hearing muted guidance from largecap IT firms; midcaps too have joined the chorus. Other than IT biggies such as Infosys and Wipro and HCL Tech, midcaps MindTree and KPIT too have scaled down their Q4 expectations.

I do not expect IT stocks to fall significantly, but they will underperform the market for some time. Domestic cyclicals, meanwhile, have fallen considerably in the last one month. They are looking more attractive as of now.