Indian IT stocks are not only about the company’s fundamentals, but also how the US political environment is and how the US economy is faring, says Ajay Srivastava of Dimensions Corporate Finance Services.
In interaction with CNBC-TV18Srivastava said that if the US elects another Democrat as its next president in the next 18 months, it could turn out to be a disaster for Indian IT companies.
“If it (the U.S. economy) doesn’t make it, your company won’t make it,” he said. Most of the leading IT companies in India, Infosys, TCS, HCLTech, Wipro and Tech Mahindra, derive more than half of their revenue from the US market.
Srivastava says that in India, only the two largest IT companies have given consistent returns. “The others performed sporadically but never produced consistent results,” he said. Srivastava also wants investors to be specific to stocks within a sector and have the ability to keep buying to reduce the average value.
He expects the US market to face even more problems if the Democrats remain in power. “If you want to invest in IT, keep this money for a while, keep watching the US market and if you get a democratic government in the next year and a half, you have to get rid of your IT portfolio because it would be a disaster.”
Srivastava advises that big money be committed to Indian IT based only on the outcome of the next US presidential election. He wants investors to go all in on the US market, not just IT companies, in case the Republicans emerge victorious. If the Democrats win? “Get out, get out, get out!” he said.
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First published: IST