Nifty Poised for Uptrend, IT Sector Offers Short-Term gains: Analyst
Mumbai: The Nifty index is highly likely to resume its uptrend following a temporary pullback, according to Rohit Srivastava, with IT stocks presenting potential short-term gains driven by pre-earnings optimism and oversold valuations.
Srivastava noted that sector rotation is a natural market phase, where leading stocks may pause while new sectors emerge. ”Sector rotation is natural in this phase – the winners of today may take a breather tommorow, and then the leadership shifts again,” he said. “But the overall trend remains upward,” suggesting investors view market dips as buying opportunities.
The Nifty IT index has recently rebounded, becoming the top sectoral gainer for two consecutive sessions. Srivastava attributes this to earnings expectations being less pessimistic then previously anticipated.”IT stocks were priced for the worst, but earnings are unlikely to be as bad as expected. That’s why we’re seeing this bounce,” he explained.
Tho, Srivastava cautioned against viewing the IT sector’s gains as a long-term trend, pointing out its ancient underperformance compared to the broader Nifty. “Since the 2000 tech bubble, IT has rarely outperformed the Nifty in the long run. The last time it led meaningfully was post-COVID, and we’re still below that relative high,” he stated, characterizing IT stocks as a “tactical trade” suitable for defensive phases or economic uncertainty.
key Takeaways:
* A temporary market pullback is expected, with the nifty likely to resume its uptrend.
* The IT sector rally is fueled by earnings optimism and oversold conditions.
* Short-term gains are possible in IT, but long-term returns are expected to lag the broader market.
* Investors should selectively buy on dips as sector rotation continues.
