Nifty IT gains 2%; Tech Mahindra, Infosys, TCS, and HCL Tech are all up. Why are stocks in IT rising?
For the past three sessions, the Nifty IT index has been in the green. According to experts, most IT equities are rising as investors shift their holdings and take a protective stance.
IT companies on Friday, June 7, including Tech Mahindra, Infosys, TCS, and HCL Tech, traded with strong gains in early trade, supporting their sectoral index, Nifty IT.
At 9:40 am, the Nifty IT index was up 2% and the Nifty 50 equity benchmark was up 0.5%.
At that point, shares of Infosys, Tech Mahindra, HCL Tech, and TCS were up 1-2 percent, while those of Wipro, Mphasis, Coforge, and Persistent Systems were down over 4%.
For the past three sessions running, the IT pack has been in the green. The index increased 2.39 percent on June 5 and 2.83 percent on June 6.
Experts report that as investors rotate their money, most IT equities are rising.
The majority of market players are attempting to play it safe due to the unpredictability surrounding government formation. It is certain that the NDA, led by the BJP, will form the government, but it is still unclear which ministries they will hold. Defensive industries typically benefit during uncertain times, according to Profitmart Securities' Head of Research Avinash Gorakshkar.
In the US and Europe, Gorakshkar also noticed some promising developments that are boosting IT stocks and investors' expectations of future growth in the industry. But this is hardly a trend confirmation; rather, it's merely a modest beginning. According to Gorakshkar, a distinct trend for the IT industry won't show up until after the management comments on the demand outlook and the June quarter profits.
In the face of market volatility, investors are shifting their funds from overbought to discounted segments, as highlighted by Saurabh Jain, vice president of research at SMC Global Securities. This helps defensive industries like medicine, FMCG, IT, and auto.
The depressing state of demand in its major markets has put pressure on the Indian IT sector. Some analysts see the beginnings of green shoots.
Because US BFSI clients are careful with their IT investment, the demand picture may stay moderate in the near future, according to brokerage company Antique Stock Broking. But encouraging indicators of a rebound are beginning to appear, such as recent robust deal bookings, which should support the medium- to long-term expansion of Indian IT companies.
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