Looks like the world will increasingly be shopping, socialising and perhaps living-online. But when investing in the sector, my advise is that you look beyond the mania and evaluate infotech stocks and the funds that own them the same way you would any investment - thoroughly, and from the perspective of a long-term owner. Here's what you need to think about before hitting the "Start" button.

The Buy Checklist - Whether you're a stock or a fund investor, do some self-examination prior to investing in this sector. Answer these two questions:

1. How much technology exposure do I already have? Technology is a wonderful long-term story, but it's certainly not a new one. Many mutual-fund managers currently indulge in tech stocks. You may already have plenty of exposure to technology without even knowing it. Most growth funds carry large technology stocks.

Weightings: Most of the outstanding performers have Infosys Technologies as their top holding today. The typical large-cap growth fund keeps more of its assets in tech stocks - 23 per cent currently - than any other sector of the market. So if you own growth funds, chances are you own lots of technology stocks.

2. Can you handle the ups and downs? Rapid changes are the rule rather than the exception for most technology companies: With rapidly changing technologies, the top-of-the-line infotech service provider has to be on his toes all the time. Because technology heroes and zeroes trade places, very quickly, their stock prices are volatile.

Too volatile: Tata Infotech at Rs 1085 is about 50 per cent from its 52-week high of Rs 2080. DSQ Software is even farther off the mark at Rs 255 from its 52-week high of Rs 694. Tech investing isn't for you if you can not stand it when your fund or stock's price slides by a percentage point in a single day.

Choosing a Tech Stock: You can manage your exposure to technology companies' naturally high risk in two ways: by knowing your stocks well and by paying a prudent price for them. Knowing tech stocks well doesn't necessarily mean being able to understand specialised and fast changing technologies. It does, however, mean understanding the underlying economics of an infotech company's business, just like you'd want to get a handle on the business of any stock you invest in.

You want to understand the company's financial health, its business model, and the capability of its management. All the key Indian infotech companies provide similar service but each specialises in a very different kind of solution, and the market for each kind has different economics.

This kind of information isn't locked up in arcane technical journals - it's right in the annual reports that companies provide.

Fortunately, all the key investor information on these companies is widely available on their website. Pay particular attention to the business overview and other statements, as they're packed with key information about what a company does and the industry in which it operates.

A second way to lower your risk in the volatile tech sector is to make sure you know what you're getting into when you buy high-priced headline stocks. To be sure, market-leading companies like Infosys and Satyam are all worth premium valuations.

Bear in mind, however, that high prices mean high expectations, and that richly priced stocks like these can take quite a hit when those expectations aren't met.

Tata Infotech, for example, declined almost 25 per cent in just a few weeks earlier this year when investors began to worry that the company's growth might slowdown. It turned out that the fears were unfounded; the company's management recently notched up its projected growth rate, and the stock has recovered. But the message is clear: Unless you've got a strong stomach for volatility, high-priced tech stocks may not be your cup of tea, since nervous infotech investors will often get out at the bottom. So if you do take a swing at costly companies like these, do it with open eyes and strong convictions.

Finally, remember that it's good to keep a close eye on the tech companies on your own, since the fast-changing nature of the sector means that winners and losers can trade places very quickly.

Choosing a Tech Fund: Maybe individual infotech stock is not your thing. You would rather pay a professional money manager to keep abreast of trends in the industry for you. Or holding only one or two tech stocks that may or may not be around tomorrow is too risky for you; you'd rather own an entire collection of them to hedge your bets.

An infotech fund may be the right entry ticket. You can ride the technology boat with adequate diversification with a small entry ticket. There are three clearly defined Software Funds available today - the blockbuster Kothari Pioneer Infotech Fund, Magnum Infotech and UTI's Software Fund. Also check how long the manager has been investing in this sector? Some technology funds might be run by managers who probably do not use a PC or if they use won't even remember the PC-XT. Once you've added a tech fund to your portfolio, resist the urge to check it hourly, or sell when its NAV sheds a few percentage points in a single day. If you believe in technology's long-term prospects, you should be a long-term investor in the sector.

-- Value Research