Massive de-leveraging and credit crunch driven by the US and spreading to Europe has led to severe pressure on the global economy with special emphasis on BFSI space which is the biggest IT spender. Post US/EU slowdown, the IT companies are now trading at close to all time low valuations. However once the uncertainties recede we expect the companies in those economies to start focusing on cutting costs and that will lead to more outsourcing and thus provide more business opportunities for the Indian IT companies. Many of the Indian IT companies have robust business models with diversification across geographies, verticals & practices. These are good businesses and would continue to outperform and present a very attractive investment opportunity in the long term despite the uncertainties in the near term. In addition to the technology sector the fund can invest in Telecom and Media sectors that are more dependent on domestic growth and domestic consumption opportunities. These sectors continue to have good earnings visibility in the medium term, although near term regulatory and business slowdown concern remains. We believe that these three sectors as an aggregate have the potential to generate superior returns over medium to long term.
