TCS and Infosys share rates hit fresh 52-week highs on Friday, ahead of January-March quarter earnings of IT firms that would commence from next week. BSE IT index scaled a fresh record higher of 28,161.97, increasing almost a per cent. Meanwhile, L&T Technology Services, MindTree and Persistent Systems shares hit all-time highs on Friday. In the year so far, the BSE IT index has rallied 15% as compared to a 4.3 per cent rise in BSE Sensex. From the BSE IT index, Eclerx Services Ltd and Sonata Software shares also hit new 52-week highs on Friday. Research and brokerage firm Motilal Oswal Financial Services prefers Infosys and HCL Technologies, on the expectation of sector-top development. It also bets on L&T Technology Services and Cyient Ltd, provided their desirable and sector-relevant portfolios.
Indian IT stocks are witnessing a dream run, lead by the leaders, the likes of Infosys and TCS, hitting record highs. “Overall, the COVID event has completely and dramatically changed the landscape of business forever,” mentioned Aamar Deo Singh, Head Advisory at Angel Broking. IT sector seems to be a main beneficiary. Singh also added that mega-offers, enormous savings on infrastructure and substantial order flows have helped the IT firms tremendously. “Also, weakening rupee, recovery in the IT sector in the US and expectations of strong Q4FY21 results are fueling the current rally,” he mentioned.
Amongst the IT pack, TCS and Infosys have hit 52-week highs largely since investors have higher expectations that Q4FY21 earnings will be robust, mentioned Ajit Mishra, VP-Research, Religare Broking Ltd. Mishra told TheSpuzz Online that uptrend is driven by higher demand for digitalisation and cloud adoption due to adoption of work from house culture. “Also, large deals and healthy order pipeline would help companies to post strong revenue growth,” he added.
BSE IT index touched a 52-week low of 12,224.39, and from there it has risen a enormous 130 per cent. Most of the IT stocks have been trading larger and outperforming the benchmark indices in the final handful of trading sessions. “Expectations of Q4FY21 results from most of the IT companies and a weakening rupee are boosting the sentiments of the investors and leading to the rally. Moreover, expectations of a buyback announcement from Infosys is another factor that is specifically driving the stock, said an analyst. “The restrictions being reimposed, increasing work from home, and recovery in the IT sector in the US are making investors shift their preference to the defensive sectors and adding fire to the fuel,” Likhita Chepa, Senior Research Analyst at CapitalVia Global Research told TheSpuzz Online.
(The stock suggestions in this story are expressed by the respective specialists of investigation and brokerage firm. TheSpuzz Online does not bear any duty for their guidance. Please seek advice from your investment advisor just before investing.)