IT stocks will bounce back in six months: BP Singh

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

ET Now: Do you think in the short term, IT stocks will suffer because of ownership or over ownership patterns?

BP Singh: One is over ownership and the second is that the euphoria which takes you to the extreme thinking. For example when the new government came, people started discussing that the rupee might appreciate to the levels of around 54-55, without realising that at that kind of valuation of currency the entire recovery process will stop.

We are ignoring that the US economy is also recovering and which is actually the real business potential for these companies. If one looks at IT with even a medium term outlook of say about six months, this particular sector will bounce back. There are three aspects which will actually help them out, one, US economy recovery, we do not see the currency actually appreciating much and the third if you notice the manner in which the cost in the economy is coming down now whether it is wages, whether it is in terms of the land prices etc.

So the policies which are being adopted by the government will result in the cost coming down and all the three will help these sectors. So therefore this is actually a good time to accumulate particularly for the investor who has a medium to long term perspective.