MidCap IT space is looking very interesting with a lot of these companies have developed capabilities in cloud and digital tech, said Nilesh Shah, managing director and chief executive officer at Envision Capital on Wednesday. That said, Shah also said he remains more positive on large-cap IT companies over midcap IT and advised investors to hold on to large-cap IT companies with a long-term view.

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Speaking to CNBC-TV18, Shah said, the pharma sector is poised for a multiyear growth.

“After seven years of consolidation and getting things right, I think pharmaceutical sector is poised for multiyear growth. This is a secular trend and I clearly believe this is probably if not the start but very early days into this rally and into this uptrend in pharma. Overall a lot of the regulatory issues seem to have been resolved by them and they have addressed a lot of concerns on that front. The demand post-COVID-19 is very resilient, very strong. So on the whole pharmaceutical as a sector is expected to be a very strong outperformer and this essentially is going to be a multi-year trend and looks extremely sustainable,” he said

Speaking about midcap and smallcap IT space, he further mentioned, “That space is extremely interesting. Clearly the midcap IT over the years has grown and achieved some size, some scale and has also developed very strong capabilities and competencies. So to that extent, I think the overall IT pack across large-caps, midcaps, small-caps looks extremely interesting. Clearly the world is moving more towards a cloud architecture, IoT, design and I clearly believe that a lot of Indian IT companies have developed strong capabilities in these kinds of segments and therefore are again poised for significant growth over the medium-term to long-term. It is one more sector where one has to be extremely positive and extremely constructive about.”

When asked about large-cap IT space, he replied, “Over the very long-term the big are going to get better and even bigger. At this stage there is a bull market in the technology services sector, own a basket across large-caps, midcaps but over a period of time be cognizant of valuations getting stretched from the midcap and smallcap side and maybe at that point of time one wants to gravitate back towards the large-caps. For now, own a basket, be positive across the board and then of course, over a period of time keep owning the large-caps essentially the masters of the pack.”

In terms of Bharti Airtel, he added, “There is some kind of rebalancing in terms of the global indices in the context of Bharti Airtel and that has triggered some readjustment in terms of its weights and that has basically triggered some bit of selling out there. A few months back there was optimism around Bharti Airtel - stemming from expected tough times for Vodafone-Idea. However, Vodafone seems to have got a new lease of life and it is not like there is going to be shut down on an overnight basis. This has delayed the growth for Bharti. That is the issue right now.”

“The big positive for Bharti will come in only when average revenue per user (ARPU) start inching up when the industry starts to take ARPU hikes. That is something which could probably be a few months down the line. Right now the street seems to be on the wait and watch mode and see when those ARPUs start hiking up and maybe that is the time when the stock would again gather the lost momentum,” he added.

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