5 Crucial Technology Stocks To Watch Out for in 2018

Guest Author | April 5, 2018, 5:40 p.m.

2017 was a year that brought a spate of good news for technology stocks. As per a U.S. News report from November 2017, its initial tech picks for the year had trumped the market and had surpassed the Standard & Poor's 500 Index by 21 percentage points. The year 2018 again seems to be shaping up well withstock markets hitting respectable highs. In India as well Year 2017 was good for the market, and Nifty gained 29 per cent, mainly on the back of sentiment or price-earnings expansion.

The tech company in India are going through times of change. The business model of the industry is undergoing a change with clients seeking IT vendors who not only provide services but also share the risk of failure. The Indian IT companies till now were known more for application development and maintenance rather than product development and consultancy. Thus the challenge they face is the need to upgrade to the latter high-margin businesses in order to adapt to changing client needs. Another dimension of this challenge is the rise in competition, not just from Indian tech companies but also from captive IT arms of companies in the US and Europe.

While these challenges are not restricted to specific tech companies, mid-cap or smaller IT firms are many a times in a better off position since while larger tech companies may be able to offer end-to end services, the medium and smaller tech companies have the added advantage of quicker adaptability as well as the fact that they often operate in niche segments and offer specialised services. Another factor is that many mid-level tech companies have diversified their market in terms of revenue share.

From a stock market point of view valuations of mid-cap companies are quite attractive; and thus these are promising for investors. In India the 5 crucial technology stocks to watch out for in 2018:

1.  Mindtree: Mindtree Limited is an Indian multinational information technology and outsourcing company headquartered in Bengaluru is a promising investment

2.  Varangee: Vakrangeeprovides banking, insurance, e-governance, e-commerce, and logistics services. Vakrangee share price was showing a positive growth recently though the company is facing some challenges currently.

3.  L&T Technology Services: IT is the best performing stock in the tech sphere with a year to year gain of 37 percent

4.  NIIT Technologies: It is a leading global IT solutions organization servicing customers across Americas, Europe, Asia and Australia. NIIT also shows promising signs for investments in the tech field.

5.  First sources solutionsis a provider of business process outsourcing services and is a promising prospect.

The order books of many of these Indian IT firms are showing positive signals. As per the analysts the better-than-expected growth in the US and many other developed countries has led to a re-rating in the Indian IT stocks.

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