It Midcaps News Today

IT midcap companies such as LTIMindtree and Persistent Systems said they are increasingly getting an opportunity to bid for bigger deals due to their strong execution. This was only open to large caps in the past. Experts said that while sectors like BFSI and hitech are down currently, there is good demand from healthcare and life sciences, manufacturing, and ER&D where the mid-tier companies have a good play.

It is close to two years that IT sector has been getting all the negative reviews from analysts. But there are some IT midcaps where the business is not just servicing big clients but operating in niche areas who have got ignored. However, now a divergence is appearing. While Infy might have cracked after its Q2 result, some midcaps and smallcaps witnessed a sharp rise post their result. It is probably time to take a look at each company separately rather than taking a call on the overall sector...

“For some more time, this whole thing can play out that the giant stocks which are very well owned, the large banks may not do well and the smaller ones will keep doing well. For a player who is not very momentum or trade-oriented, it makes sense that some of the profits made out of a lot of other small and midcaps, can be parked in the large banks because there is safety and potential for 30-40% returns.”

“The market today is chasing growth and irrespective of the fact whether it is a midcap or a smallcap, the market is ready to pay them even premium to largecaps. That is typical of a very broad-based rally which is playing out and IT is not very different over here.”

While larger players are conserving resources and maintaining a cautious approach to hiring due to macroeconomic uncertainties, midcaps are focusing on bringing in more freshers to balance out employee costs.

Investors are being drawn to underpriced public sector enterprises and mid-tier technology players for long-term investment opportunities, according to Deven Choksey of KRChoksey Holdings. However, he added that such sectors had been perfected in the short-term and it was increasingly challenging for investors to pick value from them. Choksey also discussed higher demand from rural India generating growth in FMCG companies and the efficient use of fintech by NBFC firms to disburse loans.

“We believe the midcap IT companies will continue to do well. Top bets would be Coforge and MindTree. ”

Explore Now Among largecaps, HCL Technology makes sense valuation wise and there are a lot of opportunities in midcaps also, says Quantum Securities. From a valuation standpoint, how does IT stack up and would you be also looking at a lot of the midcap IT names? Neeraj Dewan: We were looking at midcap IT but after the correction in largecap IT, it makes sense to invest more in IT largecaps. The last quarter’s numbers were pretty good and even the deal wins are good. Stocks like TCS, HCL Tec...

Explore Now The driving factor in the market is liquidity because fundamentals have gone beyond their horizons and liquidity is chasing only growth, says Yield Maximisers. Do you think that the key for the market is FII buying and whether that continues or not? Yogesh Mehta: It is a purely liquidity driven market and the FII flows from October till date is more than Rs 1.5 lakh crore. It seems the driving factor is pure liquidity because fundamentals are now going quite beyond their horizons a...