TCS share price today touched a new peak of ₹3,840 apiece on NSE, Infosys shares rose from ₹1,449 to ₹1,569 per share levels in the last two sessions – registering an increase of over 8 percent in this time, HCL Technologies share price today touched a new peak of ₹1,482.35 per share levels, Tech Mahindra shares touched a new 52-week high of ₹1,324.80 per share levels. The share price of Wipro was also not left behind in this rally as it touched a new peak of ₹449.50 apiece on NSE during Friday deals.
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According to stock market experts, IT stocks are rising due to the US Fed rate hike in the recently concluded US Fed meeting. They said the US Fed rate cut is based on strong US economic data, which means higher business for Indian IT companies. Apart from this, weakness in Indian National Rupee (INR) and strong US economic data are also doing the trick in favor of Indian IT companies.
Triggers for Indian IT stocks
Experts have listed the following reasons that are fueling Indian IT stocks these days:
1) Signal of a cut of the exchange rate of the United States: “After the US Fed’s signal to cut rates by the US Fed three times in 2024, growth stocks have been under the radar of equity market bulls. As IT is one of the growth segments that have not participated in recent bull trends, investors are pumping money behind . IT specialists like HCL Tech, Infosys, TCS, LTIM, TechM, etc.,” said Saurabh Jain, Vice President — Research at SMC Global Securities.
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2) Strong US economic date: Strong US economic data is also a reason to buy a trigger in IT stocks. Last week, we encountered better-than-expected US jobs data, which eased the pressure on the US Federal Reserve to combat inflation. Although, the US Fed has miles to go in its fight against inflation, but strong US economic data has signaled an increase in demand in the US economy. While Indian IT companies are extracting handsome business volume from the US, market expects an increase in the business volume of the Indian IT majors in coming quarters,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.
3) Weak Indian Rupee: Avinash Gorakshkar of Profitmart Securities also said weakness in rupee is also a reason for rise in Indian IT majors as IT companies get paid in US dollar. As Indian Indian Rupee has nosedived for the last few quarters, Indian IT companies are benefiting from this scenario as it helps them to improve their margins.
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4) Buying from FII: “As a result of the rate cut by the US Fed, yields on US dollars and US Treasuries are expected to come down. In such a case, FIIs are expected to shift their money out of currency and bond markets and move into other assets including equities .As Indian.stock market is one of the emerging markets where they can park their money, Dalal Street expects that money to come at Indian markets.IT and banking remained one of the favorite segments for FIIs and after value purchase, market is. expecting FII buying in IT stocks as well,” said Saurabh Jain of SMC Global Securities.
Outlook for Nifty IT index
On Nifty IT index outlook, Sumeet Bagadia, Executive Director at Choice Broking said, “Nifty IT index has given a breakout at 33,500 levels and the index has risen to the tune of nearly 2300 points in the last two days. If it succeeds to continue above. 33,500 levels on a closing basis, we can expect some more upside in the index.”
Ganesh Dongre, Senior Manager – Technical Research at Anand Rathi said, “Nifty IT index is facing hurdle at 36,900 levels, while it has immediate support placed at 33,500 levels. On breaking 36,900 levels, we can expect the index to touch 39,200 levels at the end of March. 2024.”
On IT stocks to buy, Saurabh Jain of SMC Global Securities said that one can bet on HCL Tech, Infosys and TCS as it would drive up stocks that would first benefit from above mentioned triggers.
Disclaimer: The views and recommendations made above are those of individual analysts or trading companies, and not of Mint. We advise investors to check with certified experts before making any investment decision.:
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Published: 15 Dec 2023, 13:19 IST