Medium-term prospects of IT sector encouraging: Nitin Raheja

In a chat with ET Now, Nitin Raheja, Chief Investment Officer, AQF Advisors, talks about how to play the IT stocks.

ET Now: Do you think one is better off giving IT stocks a skip for the moment, because a) the rupee or the currency equation is not favourable and b) as a group IT is still extremely over-owned? Besides, it has historically been seen that as and when the economy makes a comeback exporters always take a backseat.

Nitin Raheja: yes, I do see this short-term under-performance continuing for the IT stocks. At present, there is so much of uncertainty pertaining to the rupee-dollar equation. But my view is that if one looks at the basics of the economy — unless and until you are saying that there is going to be huge amounts of inflow coming into the country that the rupee will appreciate significantly as a result — we are a current account deficit country. If the economy picks up again, we will see the same structural imbalance that has characterised this country for years.

Given the inflation differential, given our current account deficit, the rupee has to keep on depreciating at a steady pace over a period of time. So, the IT sector will come back; it might under-perform in the short term, but over the medium term I will continue to remain optimistic as to its prospects.