Mumbai: Mid-cap information technology (IT) stocks are attracting investors and on their way to catching up with large-cap peers despite the absence of clarity on the sector’s business prospects as the US economy battles to recover.
Stocks including Firstsource Solutions Ltd, KPIT Cummins Infosystems Ltd, Patni Computer Systems Ltd and Hexaware Technologies Ltd have rallied between 15% and 35% on the back of large volumes.
As the valuation spreads have widened in comparision to large cap names, investors are finding mid cap stocks attractive at current levels.
“I think mid-cap space is the space to be in because the valuation gap is justified and there is a lot of catching up to do,” said Sharmila Joshi, an investment advisor.
In a research report, brokerage India Infoline said stability across the client base and expectations of modest revenue growth would sustain the re-rating of mid-cap IT stocks.
“As we had said in the beginning of the year, as a business we expect positive growth and margins will improve,” said Ananda Mukerji, managing director and chief executive officer at Firstsource Solutions.