Thought of titling “What could possibly go wrong with Nifty IT sector” – however, thought of let’s not get into overhype mode. By any means, IT is the hot sector in town. And the valuation of the counter is skyrocketing and investors are busy chasing the momentum.
Interestingly quarterly charts are way above one standard deviation levels and making it fundamentally overvalued and riskier from the long term investing perspective.
Too make it even more alarming the real volatility is accelerating at 3457. Acceleration is not stopping by that shows the Euphoria and extreme positive feedback loop among the investors.
Currently, the Quarterly return is at 33% i.e a move from 14767 to 19627 levels. Needless to say Nifty IT index around 2009 low was 1992 levels and since then 10x returns in the index component itself. And now the acceleration of returns are reaching the extreme.
What do you think. How far Nifty IT could accelerate? When it will be crashing? What could be the trigger for the crash?
Let me know your observation in comments.