IT stocks likely to rise as peak hawkishness in US over, says this market watcher

In terms of the December-ended quarter, the midcap IT performance was quite divergent while the large-cap IT performance was consistent. The recovery in the US due to the end of peak hawkishness from central banks and the end of concerns of peak inflation and peak recession are positive indicators for the IT sector, according to sector watcher, Mihir Vora, Director and CIO of Max Life Insurance.

Speaking in an interview with CNB-TV18, he reasoned that the US market has seen a sharp recovery from last year's bottom and that the Indian IT space is mirroring that trend.

“The US tech space has done very well in the last couple of months, of course, from very sharp bottoms that we saw last year. And India IT is mirroring that movement because we have not seen bad earnings guts as feared though my expectation is that if the domestic economy continues to do well, IT is still overvalued relative to 2019-20,” he said.

Speaking about other sectors to note, Vora highlighted some areas of concern. He noted that the cement sector underperformed last year due to high energy costs, which have since cooled off. Additionally, Vora expressed that he is not very comfortable with the valuations of building material companies and therefore has minimal exposure in that sector.

Vora also discussed the state of consumption in India. He observed that urban consumption is faltering a bit, but he sees potential for a pick-up in rural consumption. Overall, Vora painted a mixed picture of the market, with some areas of strength and others that warrant caution.