IT stocks a buy for Bajaj Allianz following slump

  • 13th Jul, 2017
Recent underperformance of Indian software stocks, once considered market’s bellwether is a glaring buy signal for Bajaj Allianz Life Insurance Co. The S&P BSE Information Technology Index is the second- worst performer among 13 industry gauges compiled by BSE Ltd, weighed down by losses in names including Infosys and Tech Mahindra. In contrast, India’s benchmark index has surged to a record. “

We prefer software stocks among defensive sectors such as pharmaceuticals and IT, as they have entered a ‘buy zone’ in terms of valuations after the recent correction,” said Sampath Reddy, chief investment officer at Bajaj Allianz. Shares of IT companies have been hurt by uncertainty about US visas amid rising protectionist rhetoric that has forced some clients to delay decisions on outsourcing contracts. Investors have also been concerned about recent reports that founders at two of the top four providers were looking to sell their stakes. “Investors must wait sixnine months for a decision on software exporters,” said Prasanth Prabhakaran, CEO at Mumbai-based Yes Securities (India). Companies able to adapt more quickly to changes in the operating environment will be “good buys.” The BSE IT Index rose 3.% so far this week. 

Source: Daily News & Analysis

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