Looking at the exuberance in the market and aggressive steps that tech companies are taking, one can sense a bubble.
With rising rupee and still existing global imbalance, companies should rationally be little conservative. But a little euphoric sense in the global stability is making companies move the pieces fast in the game. Clients that halted their IT projects during downturn have resumed their assignments giving fillip to the recruitment activities of the companies. But how far is this growth sustainable?
An explanation for the logical part of the performance can be “The low beta or defensive stocks like IT, generally do better under a risky business environment” and an explanation for sentimental part of the performance can be “commendable corporate governance of blue chip IT companies”.
There is obviously some amount of rational exuberance for the stocks but one can sense a bubble too. A portfolio with declining stocks due to various reasons like Scams (2G), Legal verdicts (MFI, SKS), Inflation can be balanced with few tech stocks. IT in India is well spread across the world. I have come across many articles about Tech Bubble in china. So Indian IT can be wary about these macroeconomic threats and prick the bubble sooner possible
