We think the bull case on India IT is quite compelling from a country-relative angle given worries about an overheated market environment (note our India strategist is overweight IT in his model India portfolio):
(a) Relatively defensive sector in a frothy India market with above-average growth/visibility/FCF/RoE/management quality, with large pool of India dedicated money looking for safe haven
(b) Significant underperformance vs Sensex suggests expectations are relatively low; Any FII outflows to hurt INR/USD (+ve for IT exports)
(c) Seasonally weak Mar-Q over, plus better regional/global tech outlook
(d) Upside potential from sharply higher dividends (e.g. at Infosys, Satyam, Wipro) and sentiment boost likely from bonus issue at Infosys.
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