TCS, Infosys, HCL Tech share prices hit fresh 52-week high, Nifty IT at new high ahead of Q3 earnings

Information Technology (IT) firms such as TCS, HCL Technologies, Infosys, Wipro, among others hit their respective 52-week highs in an otherwise weak trading session today. Ahead of the earnings season, IT firms have risen to new highs for the second day on the trot. The Nifty IT index too made a new 52-week high of 25,381.10 levels, rallying a massive 130 per cent from March lows. AR Ramachandran, Co-founder & Trainer, Tips2trades, told Financial Express Online that low debt, operationally efficient and least disrupted sector due to the COVID-19 pandemic makes IT stocks a must-have in one’s portfolio. With recent buybacks as well, all major IT stocks are at all-time highs.

Ramachandran also said that markets seem technically overbought and hence a decent correction in prices can be expected in the coming weeks in all the IT stocks. “Investors are advised to book partial profits at current levels,” he said. Eight out of 10 stocks from Nifty IT pack, scaled fresh 52-week highs today. Tata Consultancy Services (TCS) share price crossed the Rs 3,000-mark today and rose to Rs 3,114.25. Similarly, Naukri climbed to Rs 4,955.80, Coforge to Rs 2,877.55, Wipro to Rs 399.90, MindTree to Rs 1,707, HCL Technologies to Rs 995.80, Infosys to Rs 1,295.50 and Tech Mahindra to Rs 1,007.95 apiece.

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Suyog Kulkarni, Senior Research Analyst, Reliance Securities expects Indian IT names to report strong double-digit revenue growth in FY22/FY23 driven by continued deal win momentum. Kulkarni told Financial Express Online that Nifty IT is likely to enjoy premium valuation versus broader market-driven by mid-term growth visibility, stable margins and consistent cash return policy.

Analysts at Prabhudas Lilladher expects the IT sector to maintain its strong performance in FY22 as the sector has entered into technology upcycle, digital becoming mainstream, strong order book and deal pipeline, accelerated demand for cloud adoption, and broad-based demand across all industry verticals. Domestic brokerage firm Emkay Global Financial Services noted that margins are likely to decline sequentially due to the wage hike (TCS wef Oct 1, HCL Tech wef Oct 1 for grade E3 and below), promotions (Infosys, Wipro) and marginal rupee appreciation.

Edelweiss argues that Indian IT companies are poised to turn in the best Q3 in a decade given highest-ever order books, marked revenue acceleration, margin expansion, and ongoing outlook upgrades.