Basant Maheshwari, a market veteran and the co-founder and partner at Basant Maheshwari Wealth Advisers LLP believes mid and smallcap IT stocks are well-placed to give healthy returns in the long run and many of them could double over the next 12 to 15 months.
"It looks cliché but if you really want to play a theme or a small theme or a subset of a theme where you are okay to lose a little bit of temporary money but for the long run, want to make it big, smallcap and midcap IT should do well," said Maheshwari in an interview with ET Now.
"It has been about 12 or maybe 15 months of struggle for these IT companies. If these companies deliver earnings even at 15% or 20%, one would see the all-time highs come back again after one, one-and-a-half years. Many of these stocks could double over the next 12 to 15 months," said Maheshwari.
Maheshwari believes the market has discounted a recession in the US and pointed out that the local money has saved the Indian market from a crash.
"Even if a recession comes, it is already there in the price. Also, it will go away. America is not Japan, America cannot be in recession for 20 years, Japan was in recession for 20-30 years. So if it comes, it goes away, you have to look at it like this. We have to look at the recession as a part of life, it is not life and death, it is just part of life," said Maheshwari.
"The Indian market is different not because of the earnings potential but because of the local money that is flowing in and they have actually helped to save the markets this time," Maheshwari said.
Concerns over a looming recession in the US hit Indian IT stocks hard in 2022. The Nifty IT index plunged 26 percent in 2022 against a 4 percent gain in the equity benchmark Nifty50.
Analysts believe that the third quarter numbers of the IT companies may come on the softer side and uncertainty on demand may linger for the short term.
However, deep correction in IT stocks has made them an attractive bet for the long term. Many analysts believe after the revival of sentiment in the West, some IT stocks will see a strong jump in their values.
Disclaimer: This article is based on an ET Now interview. The views and recommendations given in this article are those of the analyst. These do not represent the views of MintGenie.
