“It will take some time before we know that stocks in these sectors have bottomed out,” said Parikh.
Mathew, however, feels that there are some good companies that can be bought for the long term when the market corrects.
“Sectors like power, metals and infrastructure are directly linked to the economy and the economy will not continue to stay the same. Investors can look to invest in well run companies such as Tata Steel, Hindalco for the long term,” said Mathew.
The curious case of IT
The recovery in the US economy has come as a big booster for the IT sector. A depreciation in the rupee by over 20 per cent over the last four months means higher revenues and better margins for these companies.
TCS has been the biggest gainer this calendar. Its shares have risen by almost 60 per cent this calendar. Infosys and Wipro too have gained 31 per cent and 22 per cent respectively in the same period. While the stocks have had a sharp run experts feel that the prospects remain bright for the IT companies as a pick up of growth in the US economy will lead to more business and growth for the IT majors.
“The growth in IT companies are hinged on two things, a broadbased recovery in the US and increase in penetration in Europe,” said Abhishek Shindadkar, IT analyst at ICICIdirect.
While TCS has risen by 271 per cent since 2008, growing at a compounded annual growth rate of 37 per cent since then, it only lags behind Sun Pharma among the Sensex companies in terms of performance. Sun Pharma has grown by 341 per cent in the same period. Experts say that TCS is one stock that investors should hold in their portfolio for the long run. “TCS is good performing stock with strong fundamentals and is expected to do well in the long run,” said Mathew.
With the recent run at the stock markets, TCS has surpassed the aggregate market capitalisation of the other four IT majors in the country — Infosys, Wipro, HCL Technologies and Tech Mahindra, but experts feel that the stock deserves the premium and is not overvalued.
“TCS has several factors working for it. It is getting a bigger share of revenue in big deals where several global players such as Accenture and IBM are involved and it is getting more long-term projects. Its business is well spread across various geographies,”