IT shares gain up to 6%; Nifty IT, Infosys scale fresh record highs

Shares of information technology (IT) companies were in focus on Tuesday with Nifty IT index and Infosys hitting their respective record highs on the National Stock Exchange (NSE) on the expectation of strong earnings growth in the October-December quarter (Q3FY21).

At 02:37 pm, Nifty IT index was up 2.7 per cent as against a 0.82 per cent rise in the Nifty50 index. The IT index hit an intra-day high of 23,512, surpassing its previous high of 23,507, touched on Monday.

Infosys, HCL Technologies, Tech Mahindra, Larsen & Toubro Infotech, Coforge and Mindtree were up in the range of 3 per cent to 6 per cent on the NSE. Tata Consultancy Services (TCS), Wipro and Mphasis gained between 1 per cent and 2 per cent.

Among individual stocks, Infosys hit a fresh record high of Rs 1,220, up 4 per cent, surpassing its previous high of Rs 1,210 touched on Monday. The board of directors of the company are scheduled to meet on January 13, 2021 to consider and approve the audited consolidated financial results of the company for the quarter and nine months ending December 31, 2020.

According to analysts at Emkay Global Financial Services, Infosys is likely to outgrow TCS for the second year in a row in FY21 while narrowing margin differential. The brokerage firm expects Infosys’ valuation gap with TCS to narrow down further on the back of sustained strong operating performance.

Meanwhile, last week, Ireland-based Accenture reported strong earnings for the quarter ended November 30 (Q1FY21) and revised upwards revenue growth forecast for the full fiscal year of 2021 to 4-6 per cent from an earlier estimate of 2-5 per cent.

Accenture also raised its revenue growth guidance to 4–6 per cent in local currency compared with 2–5 per cent previously, including a negative 1 percentage point from a decline in reimbursable travel costs for FY21. The company expects operating margin for the full fiscal year to be 14.8–15.0 per cent, an expansion of 10–30 bps from fiscal 2020.