Has a Trading Opportunity Opened Up in IT Stocks?

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Information technology (IT), widely considered as a defensive, has under-performed other sectors as well as the benchmark.
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While the Sensex has gained 15 to 16 percent since its February lows, BSE IT index has remained almost flattish.

The concerns surrounding the sector are many. Analysts believe that the bread-and-butter of application development faces challenges from emerging technologies such as automation and cloud. Spending from financial sector clients too has been on the wane. Most recently, Brexit has thrown a further spanner in the works.

Not surprisingly, many analysts have recommended investors seek out exposures in other faster-growing sectors. In addition, poor earnings performance in the June quarter by the top IT players have just reinforced fears pertaining to the sector.

But some believe that the market reaction to the recent events may now be overdone.

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