``Scrips like Infosys and NIIT will not go up 4-5 times from here. What has happened in the last six months will not happen all over again. On the other hand, earnings of these companies will continue to grow at 40-50 per cent per year for next 4-5 years. There is lot of steam left from that angle,'' says an analyst at Alliance Capital Asset Management Company. ``These heavyweights are expected to move in a particular band for some more time and this is where fund managers have to book profits. It is definitely time forfund managers to sit up and identify stocks that can again generate phenomenal returns like today's IT heavyweights have done in the past,'' says a fund analyst.

The current upsurge in the market has taken the Sensex from a level of 2862 on September 1 to 3225 on September 24, a gain of 363 points or 12.68 per cent. However, Barring Satyam Computer and Pentafour Software, others have been sensex underperformers. While Satyam and Pentafour have outperformed the sensex by 6 and 4.2 per cent, respectively, Infosys, Aptech and NIIT have underperformed sensex substantial margins. Tata Infotech has in fact dropped from its September 1 level of Rs 1551 to the current price of Rs 1491.

``The top line companies are merely consolidating. Infosys touched Rs 2700 when the sensex was 4200. Today, it is down around 7 per cent from that level while the market is down 30 per cent. These scrips will move up once the phase of consolidation is over. The problem is that these scrips have outperformed the market by a hugemargin,'' says Gul Tekchandani, Chief Investment Officer at Sun F&C Mutual Fund.

``Since these scrips have outperformed the market by a huge margin and have high PEs, it is precisely the reason that after a point of time, they will not rise as fast as the market unless they post a spectacular performance in comparison to the already high growth rate in the industry,'' adds a Mumbai-based fund manager.

But while opinion is divided on current heavyweights, fund managers are already busy scouting software scrips with the potential to deliver high returns. ``We expect NIIT and Satyam to appreciate even from current levels due to high growth in earnings which will progressively bring down the P/E ratios. At the same time, stocks like BFL Software, Sierra Optima and PSI Data appear promising. Mastek, if and when it restructures, also appears to be a good bet,'' says Vivek Reddy, CIO at Kothari Pioneer. ``However, these scrips will not from the core of our portfolio since they have lower market cap and lowerliquidity.''

``There are definitely good bets in the B group and investors will always chase small companies when others have been high priced. Retail investors and funds are getting into B group scrips and will chase next Coke or Lever, but which I don't think exist,'' points out Tekchandani. Adds T P Raman at Sundaram Newton, ``Though we own scrips like BFL and Leading Edge, we have no plans to go down the ladder.''

Fund managers are also of the view that there are certain B group scrips which is in the process of making them A grade. Once done, these counters will give good returns. ``Companies like BFL and Software Solution are in the process of upgrading themselves. You either need new management, new businesses and critical mass to achieve that. But investors have to be very cautious from picking up scrips from the B group,'' says the analyst at Alliance.

No wonder, speculative activity has already gripped the B group IT counters like Cauvery Software, Lee Nee Software, Shyam Software andEuropean Software with these scrips clocking huge volumes.

``There are fly-by-night operators already and people are bound to get hurt. It could also have some impact on good IT companies but only for a brief period. You need to invest only in companies with 8-10 years of track record,'' cautions Tekchandani.

Fund managers expect unlisted IT companies to tap the primary market, given the potential of the sector. ``The initial flush of growth requires heavy dosage of capital. Besides, listed companies have their own advantages like valuations, market determined price and the market corrects you when you go wrong,'' says Bharat Shah at Birla Capital AMC.

``Given the sector's potential, a number of unlisted companies that need capital will access the market, especially since the promoters see an opportunity to increase their wealth. One such company is Sonata Software,'' adds Reddy.

However, while investors have to be on their toes while investing, promoters should make sure that they do not charge tooheavily. ``You need soft pricing since the investor is sceptical. If two stocks fare badly on debut, the charm of IT sector will go,'' says the analyst at Alliance.