 "IT stocks: LTIM, Wipro, LTTS, Mphasis soared up to 8% today; here's why")
The Nifty IT index soared 2.40 per cent in intraday trade on Wednesday. Among individual information technology stocks, LTIMindtree led the charts soaring 7.76 per cent intraday at Rs 6,198 per share on the NSE.
Meanwhile, Coforge surged 4.34 per cent at Rs 6,345, Wipro rose 4 per cent at Rs 538.10, LTTS scaled 3.2 per cent at Rs 5,666 and Mphasis jumped 3 per cent at Rs 3,126 per share on intraday levels.
Others such as Infosys, Tech Mahindra, Persistent Systems, TCS and HCL Tech surged in the range of 1-2 per cent each intraday. By comparison the Nifty50 soared 0.3 per cent registering a new record high at 25,110 levels intraday.
At 12:57 PM; LTIMindtree was trading 7.45 per cent higher at Rs 6,180; LTTS was 3.87 per cent higher at Rs 5,700; Wipro was trading 3.71 per cent above at Rs 536; Mphasis was up 2.31 per cent Rs 3,104 and Coforge was 3.57 per cent higher at Rs 6,297 a piece.
In the last three trading sessions, the Nifty index has zoomed 3.72 per cent. This came after a couple of factors boosted investor confidence in the IT stocks. On Friday, August 23, the US Federal Reserve Chairman, Jerome Powell signalled high possibility of rate cut in September in his speech at Jackson Hole, stating that the time has come to ease policy on the interest rate front.
Apart from a dovish US Federal Reserve, the positive momentum in the IT stocks today also came ahead of the earnings expectation report from US based artificial intelligence major Nvidia.
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Per reports, the stakes are high ahead of Nvidia’s Q2 earnings report, especially following a season of disappointing results from other ‘Magnificent Seven’ mega caps. Nvidia, which has the second-largest weighting in the S&P 500 after Apple Inc, is poised for significant swings due to its hefty valuation.
Reports suggest Nvidia's numbers are expected to be strong, but guidance will be key to evaluating whether demand remains robust. Any negative news could trigger a significant market rotation, given the current heavy positioning in megacaps.
A strong performance and outlook by Nvidia in its earnings expectation report could signal a rebound in discretionary spending, potentially benefiting the Indian IT sector.
“Nvidia earnings reports are a possible trigger for today's gain but more important is the positive management comments on recovering discreationary spends post Q1 results of IT firms, suggesting that greener pastures are emerging for them. Secondly, the US Fed rate cut hopes are also positive. Lastly, looking at the inflated segments in the Indian equity market, valuations are still comforting in the IT space,” said Ambareesh Baliga, an independent market analyst.
Baliga added that once the US presidential elections are over there will be more clarity over the order book of these companies.
That said, analysts also concur that client conversation and decision-making continue to be encouraging for the Indian IT space. “Traction in BFSI, healthcare is encouraging, hi-tech, auto, and retail is soft, manufacturing is balanced. We believe constructive messaging of Q1FY25 earnings may continue in Q2FY25 as well, led by improving growth trajectory and visibility,” said AbhisheK ShindadKr - Equity Analyst - InCred Capital.
Against this backdrop, Baliga said large cap players are usually a safer bet when green shoots are visible. TCS, HCL Tech, Infosys and LTIMindtree are attractive bets in the sector, he said.