Yes, the **IT index** has come to a reasonable valuations, yes they are superior quality business with high RoE and ROCE, but what is the first reason for investing into the equity market ?
1. To buy businesses who are growing more than other companies and the sector it is it, so that you outperform.
2. You buying a mispriced bet- a company with a value of Rs.1 trading at Rs.3 or 5 due to whatever reason and waiting for a trigger to happen so that market corrects its mistake and you make money in the mistake realisation.
Is either of this playing out in the index? I don’t thing so. But what do I know.
The index is outperforming the broader market. So, I might be wrong- the market might be thinking the growth will be back soon and trying to move in anticipation or it is just a pullback before it falls further as long as the previous high is not broken. Only time will tell…
\*\*Just trying to write down my thoughts, not a recommendation.
https://preview.redd.it/nb42rnps1pfg1.png?width=1815&format=png&auto=webp&s=c0536ea557445b8811cee7aa5b6ecbf2d308854f