These days the market’s focus is on the results season. Q3 results have started with the results of Tata Consultancy Services (TCS), the largest company in the IT sector. The results of almost all the big IT companies will be out this week. But before this many mutual fund (MF) companies have distanced themselves from the IT sector. However, some MF companies are also overweight on this sector. UTI MF is maintaining an overweight view on this sector with a weightage of 18.40%, Axis MF with a weightage of 14.90% and Kotak MF with a weightage of 14.20%. While Mirae remains underweight on IT sector with 13.70% weightage, Aditya Birla MF with 11.20% weightage and Nippon MF with 9.50% weightage.
Explaining the reasons for MF companies to stay away from the IT sector, Mithali Jain of our associate channel CNBC-Awaaz said that the reason for MF’s concern on the IT sector is that Q3 is mostly a weak quarter for this entire sector. There are more holidays and vacations in this quarter due to which it remains a weak quarter. Due to these furloughs, projects get stuck and income is also affected.
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Trends of IT companies
Mithali further said that IT companies are adopting the strategy of not providing new jobs at this time. The focus of companies is on giving more work to the existing employees. Companies are getting new deals in healthcare, retail, e-commerce sectors. BFSI, manufacturing companies are reducing expenses. Attrition seems to be under control in the sector at present, which is a very positive sign for the companies.
What are IT companies doing?
At present, big companies like TCS, Infosys are working to reduce costs. Along with this, she is also focusing on big deals. Whereas Wipro, HCLTech are worried about the slowdown in BFSI. Growth of midcap IT companies may slow down in Q3.
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