Comment on the market correction today Mr. Pratish Krishnan Fund Manager & Senior Analyst, Baroda BNP Paribas Mutual Fund
Below the Comment on the market correction today Mr. Pratish Krishnan Fund Manager & Senior Analyst, Baroda BNP Paribas Mutual Fund
However not all is lost for the sector. Unlike previous crisis such as the global financial crisis or Covid-19, US GDP is likely to see a slower growth vs decline reported in those years. As per US FED, GDP is likely to grow at 1.7% during CY25 which is a fall from 2.1% estd, but much better than 2.2% degrowth reported during CY2020. Europe on the other hand is seeing recovery led by higher investments and increase in consumption.
Given tariffs are likely to impact manufacturing activity, Banking and Financial services which has a large exposure to Indian IT services companies could be resilient in these tough times.
Finally we are in the midst of a technological investment cycle led by shift to cloud and adoption of Artificial Intelligence (AI). AI spending is likely to be mainstream in the next 2-3 years which could drive demand for IT services companies.
Post recent correction, valuations are now in line with five-year averages and FCF (expand term) Yields have turned healthy for the sector. While sector valuations, post recent corrections have turned attractive, concerns on US macro need to recede to be constructive on the sector.
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