The Indian IT services sector continues to be its biggest strength globally. The sector continues to face turbulence due to global slowdown, delayed spending, which is reflected in revised estimates. On a positive note, there are signs of a turnaround in the sector's fortunes which is reflected in large deal wins which the IT companies have won over the last few weeks.
Growth could see some challenges from slowdown in manufacturing as also tepid export demand. Even so the festive season over the next two months could prove decisive from point of view of consumer demand.
The country's balance of payments could see some pressure with hardening of crude prices combined with rising interest rates in global markets.
For cues, markets will look at the geopolitical scenario especially crude oil price, upcoming earnings season as also global macros like the Fed's stance and global interest rate outlook.
Valuations are a mixed bag with certain pockets particularly in small caps and mid-caps appearing unsustainable. We could likely see a consolidation in segments which are quoting at expensive valuations. Investors can consider the SIP route in categories like large cap / flexi cap funds, which are more comfortably placed valuations-wise.