IT stocks rally as Morgan Stanley upgrades rating; sector set for revival

US-based brokerage says 2018 will be year of turnaround for the IT pack; Favours large-caps

Large-cap information technology (IT) stocks rallied on Tuesday on the back of a rating upgrade by influential brokerage Morgan Stanley. Shares of Tata Consultancy Services (TCS), Infosys and Wipro gained around four per cent each after the brokerage revised upwards their price targets between five per cent and 26 per cent.

"Indian IT services stocks could be set for a turnaround in 2018," said Morgan Stanley analysts Parag Gupta and Gaurav Rateria in a note dated January 15. "Valuations are at or below long-term averages and an improving global macro could spur tech spending, which could re-rate stocks," the duo said