Indian IT companies to see a re-rating similar to FAANG stocks: Edelweiss

Information technology (IT) stocks have been on the investors’ radar in the calendar year 2020 (CY20) as a safe haven bet at a time when the economic activity came to a near halt due to the Covid-19 pandemic and the subsequent lockdown to stem the spread of the virus. Thus far in CY20, the Nifty IT index has risen 15.5 per cent as compared to over 5 per cent decline in the benchmark Nifty50 index.

Analysts see more headroom for the IT stocks over the next few quarters. According to Edelweiss Securities, IT stocks are trading at a 40-60 per cent discount to their fair value and global peers, and this anomaly in valuation is likely to correct over the next three-four years.