Market fall yesterday was mainly due to the anticipation of Fed meet that is going on and there is fear that the FED would indicate the path for rate tightening. The depreciation of rupees with respect to USD may very well happen if the FED start the tightening and the market reaction maybe as drastic as when it happened after Ben Bernanke's QE Taper speech. If that happens then defensives like IT and pharma will perform relative well compared to other sectors. Fed tightening means US GDP and unemployment numbers are expected to be good which is also good for these sectors.
But if the tightening is smooth and market recovers without too much fuss then other sectors could be better bets especially if the govt unveils any meaningful plans for the future like policy on diesel subsidy. Many market players were predicting that we were in the second phase of bull market last week, but I can't see that happening until Banks clean up their mess first and the over-leveraged firms get their balance sheet restructured. Only then a bull market level rally could be sustained. So even if the market recovers I think defensives will be a good bet since they were the sectors that were doing good prior to this fall.
So I think if you are not too bullish on the market, then IT sector would be a good pick without going into individual stock valuations. I personally don't invest in IT companies off late because you never get the large cap/midcap ones at bargain prices and the small cap ones tend to be very risky because of lack of diversification and complex nature of business that depend too much on a a very few clients and deals.
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