After being under pressure for almost 1 year due to global recession, the investment in tech funds has been under a vast impairment. The tech stocks has told to see a downside over 23.04% last year.
The global geopolitical tensions, flatulent valuations, high growth of interest rates are some of the core reasons behind this. Giant companies like TCS, Infosys, HCL and Wipro are even facing a course of changes in their fund houses. Meanwhile, the regression made an entry point for fund houses raise their value by purchasing opulent IT companies at a discounted price.
However, it remains a question how long it would give an assurance to invest in these funds. There are lot of factors that are going to take over the market, making the market more volatile. Some of them are the following:-
- The IT sector is hovering towards at a point of uncertainty as there a bank collapses in the US and public spending has been not that much active in the market. It also indicates the volatility in the IT sector in India, as they are hugely dependent upon the foreign companies.
- In advent of AI models has heavily impacted the tech industry as many says it will moderate the large part of services bringing upon damage towards the capitalisation market.
- Moreover, diversified investments on various sector often make the funds susceptible to the performances of the specific sector.
In February 2023, the firm’s saw a substantial growth of 1-3%. According to Vaibhav Dusad, fund manager of ICICI Prudential Technology Fund, it was due to temporary sector rotation. Despite underperforming around 25-30% in FY2022, it surpassed it’s valuation around this time. Moreover, he said owing to the post-Covid tech sector returns occurring high, it is prudent for the investors to remain investing for 2-4 years approximately. In this term, systematically investing through SIP can become one of the correct decisions.
Now, considering the subsequent factors and the emergence of negative impact in the sector, it is essential to look upon various depending factors before investing. It is also advised to diversify equity funds, which will be effective in long run, and consult competent tech investment experts for that.