Best IT stocks in India for long-term returns in 2022

The IT sector is crucial to the Indian economy. Information Technology/Business Process Management (IT-BPM) companies are famous for carrying little to no debt and generating high profits, and they accounted for 7.4% of our nation’s GDP in the fiscal year 2022. Exports from India’s IT industry increased by 15.9% during 2021-22, estimated at around US$ 171.9 billion in total. So, if you’re looking to invest your money in stocks for the long haul, this sector is worth considering. With strong prices trends and the scope of high performance, the IT sector can be a good avenue for experienced and novice investors.  

We have rounded up a list of the best IT sector stocks in different categories for you to invest your money in. Before proceeding, please note that the stock market is extremely volatile, so do your research well before making huge investments.

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1. Large-cap stocks

Well-established companies with a significant market share are referred to as large-cap companies. They have market caps of INR 20,000 crore or more. Investing in the stocks of such companies is always a good idea since they are capable of holding their own even during tough times, such as a recession. The lower volatility makes them a safer option for investment.

Here are the best IT stocks in India in the large-cap sector:

1. Tata Consultancy Services: TCS happens to be the largest IT company in India in terms of market cap. It is also the world’s largest provider of IT services. Besides providing various services such as digital transformation and IT platforms, the company is also stepping into new technologies like AI and ML.
    
2. Infosys: The second-largest IT services provider in our country, Infosys, is a great stock to invest in for the long haul. It provides IT services to global clients across several verticals. It offers services in communications, BFSI, energy and utilities, manufacturing, etc.
    
3. Larsen & Toubro Infotech: L&T is a major IT services provider in India, offering infrastructure services and security, analytics, enterprise solutions, and more. It provides services to companies across the globe and has consistently shown great returns on investment.

Related: How Large-Cap, Mid-Cap, And Small-Cap Funds Are Categorised?

2. Mid-cap stocks

Companies with a market cap of over INR 5000 crore but lower than INR 20,000 crore fall under the category of mid-cap companies. These companies offer high growth potential and have the ability to become large-cap companies with time. Investing in the stocks of mid-cap companies is slightly riskier than large-cap stocks since the former tend to be more volatile. However, their growth potential attracts plenty of investors.

Here are some IT stocks India in the mid-cap sector:

1. Mindtree: Mindtree is a multinational company headquartered in India. It is a great mid-cap stock to lock your money in for the long run. It offers technology consulting services along with data transformation consulting by using AI to present data-driven customer experiences.
    
2. Coforge: Coforge, too, is a multinational IT company headquartered in India. It leverages AI, cloud, digital experience, automation, engineering, and data to enable digital transformation for its clients.
    
3. Zensar Technologies: Zensar is a global corporation that not only conceptualises but also builds and manages digital products using data engineering, experience design, and advanced engineering services.

Related: Risks To Consider Before Investing In Small-Cap And Mid-Cap Companies

3. Small-cap stocks

Small-cap companies are companies that have a market capitalisation under INR 5000 crore. While they are relatively smaller, they present much more growth potential. Since it is difficult to predict whether a small-cap company will become hugely successful in the future or not, there is some degree of risk involved in investing in such stocks. However, such companies have an impressive history of emerging as excellent performers after a rescission.

Here are some of the best small-cap IT sector stocks:

1. Mastek: Mastek is an Indian MNC that provides enterprise-level digital transformation products and services for clients across the US, the UK, and India.
    
2. Newgen Software Technologies: Newgen is an industry leader in providing a unified digital transformation platform. It offers native process automation, communication management, and content services. The industry recognises its low code application for developing and deploying complex business applications on the cloud.
    
3. Zen Technologies Limited: Zen Technologies develops combat training solutions for defence and security forces across the globe. Headquartered in Hyderabad, it has offices in the US and other Indian states as well.

Related: 5 Best Small-Cap Funds You Can Bet On

Investing in stock markets is always a risky business. Finding the right stocks to invest in can be a real challenge, but our list of the best IT sector stocks should help you make an informed decision. Depending on how much you want to spend, you can choose to put your resources into different large-cap, mid-cap, or small-cap companies.

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.