Prefer IT stocks from medium-term perspective; 15-17% revenue growth should not be a challenge: Dhiraj Agarwal

In a chat with ET Now, market expert Dhiraj Agarwal shares his view on the factors that are capping an upside in the market. Excerpts:

ET Now: All of a sudden we heard three or four companies coming out with warnings for Q4FY15. What do you do with IT because it is not just the problem with midcap IT firms, even largecap companies like TCS have come out, saying that Q4FY15 looks weak?

Dhiraj Agarwal: I still like IT from a medium-term point of view.

There is a paucity of growth in the world. Global markets are rising. Take an example of German markets. They are is making new record highs not because there the economy is doing growth, but because of quantitative easing in the Europe. The weakness in the Europe is actually helping the country. Now, look at markets across the US.

US stocks are making record highs largely on easy money policy. The growth in the US is not very strong.

In that context, it may not matter much if the IT sector grows a bit lesser or higher than market expectations. A growth rate between 15 per cent and 17 per cent over the next two or three years should not be a challenge for IT firms. Take the example of FMCG for instance, as compared to what the expectations were two years ago, or even a year-and-a-half ago, most of the FMCG companies including the leader Hindustan Unilever is not really growing as strongly as what was expected. Initially when the bad numbers trickled in, the stocks corrected, but they are back to new high.

Therefore, the growth of IT sector has to be seen in the backdrop of the fact that there is no growth elsewhere right now.