Tata MF’s Rahul Singh Suggests A Safe Bet If Liquidity Woes Intensify
IT stocks delivering high single-digit revenue growth are in the bag, says Tata Mutual Fund’s Rahul Singh.
Information technology companies are expected to deliver high single-digit revenue growth even if macro issues such as liquidity crunch and economic slowdown become worse, according to Rahul Singh, chief investment officer (equities) at Tata Mutual Fund.
“IT services are like a hedge to have in your portfolio in case economic growth does not pick up and domestic cyclical sectors do not do well,” Singh told BloombergQuint. “The consequence of rupee depreciation is a tailwind (for IT companies) if crisis-hit non-banking financial companies become a systemic problem.” Rupee depreciation benefits IT companies as they bill a majority of their American and global clients in U.S. dollars.
The Nifty IT Index is the second-best performing sectoral gauge among those compiled by National Stock Exchange in the past 12 months. The gauge advanced 17.6 percent only behind the Nifty Financial Services Index.
India’s GDP growth slowed further to 5.8 percent in the January-March quarter as consumption and investment in the economy weakened.
IT stocks delivering high single-digit growth are in the bag helped by buybacks and not necessarily by margin expansion. Also, their valuations are at higher-end of their historical range but not terribly expensive as of now.Rahul Singh, Chief Investment Officer (Equities), Tata Mutual Fund