IT to stay strong on US growth recovery and demand buoyancy: Dhiraj Sachdev

In a chat with ET Now, Dhiraj Sachdev, Senior VP & Fund Manager-Equities, HSBC Asset Management shares his market outlook. Excerpts:

ET Now: What is the sense that you are getting about IT earnings this time around, because a lot of eyebrows have been raised given the way Infosys has actually started off this earnings week, down for two consecutive days? Do you sense that perhaps it would be a weak quarter as traditionally it is, for the entire IT basket?

Dhiraj Sachdev: Seasonally, the December quarter is generally weak, given the larger number of holidays owing to the festive season in the US, but the US recovery augurs well for the IT sector. We are seeing renewed growth guidance from many companies in this sector and we believe the earnings growth momentum should sustain for larger companies and select midcap IT companies.

So we are not negative on IT. It is a very capital-efficient business. We are seeing stabilisation of margins at the company level and even as far as the large companies are concerned, we are not seeing any change in trend in the US demand environment. In fact it is only on the rise.