Market expert Saurabh Mukherjea says it does not make sense that several market participants are turning bearish on the tech sector as Indian IT services companies will continue to get more deals in the pipeline.

Share Market Live

NSE

"The West is only 1/3rd of the way through the shift to the cloud. There is work to be done, so it doesn't matter what the GDP growth in America, Sweden, or the UK is. The Indian IT services companies will carry on getting plenty of work, and on the back of that, they will post healthy results for many years to come," he told CNBC-TV18 on Friday.

When firms are concerned about macro headwinds like an impending recession in America, Marcellus Investment Managers Founder and Chief Investment Officer Mukherjea highlighted that the US recession has historically been a positive for India. In the last 40 years, India has never had a stock market move without a recession in America.

According to him, the reason for this is two-fold. "One, it (US recession) conks off oil prices and two, it brings down the cost of money. The cost of money argument this time round perhaps isn't as powerful because of the inflationary backdrop and the rate hikes in the West, but the oil price relief is already palpable," he explained.

Also Read: Infosys shares top Nifty gainer after margin beat, deal wins drive analyst upgrades

Keeping in mind the local vibrancy of the economy, the festive season demand, overall tax collection buoyancy, and macro buoyancy, Mukherjea's suggestion is to remain focussed on buying high-quality Indian companies instead of macro forecasting.

Talking specifically about L&T Tech, the expert said it is not an IT services company but an engineering R&D provider, which sounds superficially similar to IT.

"It's a different type of company to say a TCS, but small and midcap IT. Historically, we have stayed away, and I don't think we will change our point of view. It's better to focus on the giants. We have TCS, but Infosys is doing very well as well," he said.

Also Read: Here's what TCS bosses said on margin guidance and plans of hiring more | Q&A

Mukherjea also spoke about consumption booming in specific sectors, the rise in car sales while two-wheeler sales are declining, and market demand for informal labour, which he thinks is still under pressure. He also said that Indian companies that sell formulations abroad are not investable.

Watch the accompanying video for more details.

Catch the latest stock market updates on CNBCTV18.com blog here

Also Read | HCL Tech Q2: Revenue guidance raised while margin expectations toned down

(Edited by : Kanishka Sarkar)