IT sector seeing disruption, stocks underperforming: Should you go contra?

Analysts see growth remaining muted for the next two years, advise stock-specific approach

Another quarter has gone by and technology majors have again failed to live up to the expectations – a couple of them have even lowered guidance for seasonally weak December and March quarters. A mere 4% rise in the Nifty IT index year-to-date also reflects the challenges and disruptions the domestic information technology (IT) firms have been facing for the past few quarters. While valuations on the counter have come off at reasonable levels and the recent dividend/buybacks are seen supporting the stock prices, analysts believe a stock-specific approach across the sector makes better sense than contra bets at present. 

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