IT rally may pause after recent run-up, investors need to analyse bottom-up

A bottom-up bet on stocks of companies proactive in digital and other new technology areas could still pay off

The NSE Nifty IT Index has rallied 24.3 per cent over the past year. This makes it the best sectoral performer over this period. Experts, however, warn that after this rally, valuations within the sector are no longer inexpensive (see table). Investors who choose to invest need to do careful bottom-up analysis of stocks, and select them on individual merit, as the sector as a whole may not outperform in the near term.  

Several factors contributed to the rally in these stocks over the past