Lull in IT stocks for short termed: Dipan Mehta

In a chat with ET Now, Dipan Mehta, Member BSE and NSE, shares his views on IT stocks.

ET Now: Do you think IT stocks will correct a bit further from the levels that they are right now, due to current position of the rupee, due to valuations, due to sectoral churns and would you buy them at lower levels?

Dipan Mehta: If an investor portfolio is already overweight or equal weight in IT, then it does not make sense to buy IT but for an investor who is looking to start building a portfolio and putting money into the market for the first time then for that investor IT make sense to buy at these levels. The correction may last for a few more weeks, you could see 2% to 5% further reaction from these levels but medium to long term these companies are fantastic.

They are available at reasonable valuations, excellent corporate governance standards, very little scope of diluting of equity and once all this din over new prime minister and economy and everything settles down, then investors will again start looking at businesses which can deliver compounded growth of maybe 15% to 25% or thereabouts and IT certainly fits that bill.

Lull or selling pressure which we are seeing in IT appears to be of a short term nature and maybe 6-12 months down the line, these companies will again deliver returns which are in line with what the peer group or what the index has delivered.