Indian IT stocks are not just about company fundamentals but also about how the US political environment is and how the US economy is performing, according to Ajay Srivastava of Dimensions Corporate Finance Services.
In an interaction with CNBC-TV18, Srivastava said that in case the US elects another Democrat as its next president in the next 18 months, it may turn out to be a disaster for Indian IT companies.
"If that is not going to perform (US Economy), your company is not going to perform," he said. Majority of India's top IT companies, Infosys, TCS, HCLTech, Wipro and Tech Mahindra get more than half of their revenue from the US market.
Srivastava says that in India, only the top two IT companies have given consistent returns. "The others have performed sporadically but have never given consistent returns," he said. Srivastava also wants investors to be stock specific within the sector and also have the ability to keep buying to average it down.
He expects the US market to face more trouble going forward if the Democrats continue to be in power. "If you want to invest in IT, hold this money for some time, keep watching the US market and if you get a Democratic government in the next year-and-a-half time, you need to exit your IT portfolio because that would be a disaster."
Srivastava advises committing big money to Indian IT only based on the outcome of the next US Presidential election. He wants investors to go all in on the US market, not just IT companies in case the Republicans emerge victorious. In case of a Democratic victory? "Exit, Exit, Exit!" he said.
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