The NSE IT Index surged 1.9% on Monday, building on Friday’s 5.4% jump in the benchmark following December quarter earnings by Infosys and TCS which were not as bleak as investors had expected.
Wipro was the top gainer, surging 6.4% followed by HCL Tech, which advanced 3.1% on Monday. Tech Mahindra and Infosys gained 2.3-3%.
Some market participants warned the run-up in these stocks in the past couple of days may have been excessive and recommended booking profits.
“We do not see further upside on IT stocks since they have already run-up, given that the results have mostly been in-line with street expectations,” said Devarsh Vakil, deputy head of fundamental research at HDFC Securities.
Vakil said that their target prices for most stocks have been achieved, and they will wait for further clarity on the demand side before adding them.
The Nifty IT index has gained 7% in the previous two trading sessions compared to the 2% upside in the Nifty.Wipro shares had gained as much as 14% earlier on Monday after the company’s net profit in October-December fell 12% from a year ago to 2,694 crore, which was considered better-than-expected.
HCL Tech rose as much as 5.1% after its net profit rose 6% year-on-year to 4,350 crore. Net profit of Infosys fell 7.3% in the December quarter from a year ago, while slashing its full year revenue guidance. TCS net profit gained 2%.
“While the growth is just decent, IT was an underowned sector which has outperformed and come to the forefront,” said Apurva Sheth, head of research at Samco Securities. “We see this rally continuing for longer and have HCL Tech as our top pick, given its all-time high PAT and sales.”
On the technical charts, the outlook for IT index looks positive. “We may see a continuation of the uptrend in the sector and the index could approach its previous all-time high of 39,440 soon,” said Ruchit Jain,lead research analyst at 5Paisa.com.
Reference :
Reference link
+ There are no comments
Add yours