Shares of Infosys too, are trading with gains of up to 2.5%, reversing earlier losses. Another potential headwind, despite which the stocks are moving higher, is the weakening of the US Dollar, which is now under threat of slipping below the mark of 98.
A stronger US Dollar generally means better margins for IT companies.
Infosys has guided for 0% to 3% growth in constant currency terms for FY26, which many analysts have termed to be “aggressive” for the higher end, but have still reiterated the stock to be its top pick, despite marginally cutting their price targets and earnings estimates on the stock.
The other major mover among IT names today is Tata Elxsi, which surged as much as 9%, even as earnings missed expectations for the third quarter in a row.
Tata Elxsi’s revenue declined, margins narrowed and profit also fell sequentially during the March quarter. However, the management believes that growth will return from the second quarter onwards and that revenue uptick will come from large deal wins.
The move on Tata Elxsi has also rubbed off on other Midcap names like Mphasis, Oracle Financial and LTIMindtree.
Coforge is the top gainer on the Nifty IT index in today’s session, gaining well over 6% and that is after Motilal Oswal Mutual Fund acquired stake in the company, buying 3.5 lakh shares at an average price of ₹6,605 per share via block deals on Thursday.
With the stocks having declined 25% to 40% from their respective peaks, most of the bad news, according to analysts, appears in the price. The fact that Infosys gave guidance for the year, when some analysts feared that it won’t, also aided positive sentiments.
IT stocks will continue to remain in focus through the week, as names like HCLTech, Tech Mahindra and LTIMindtree along with Persistent Systems will be reporting their quarterly results over the next four days.
“My sense is, most of these largest IT plays will probably go into a time correction, if not a price correction for the next six months, at least, still thinks ease out, and then they probably become a better dividend yielding plays. 4 – 4.5% wherever they are is not a bad deal for people who are looking at the long term accretion of dividend to portfolios. But I am still of the belief that IT will face some issue. We will have to be patient with the IT turnaround. But given the way the banks are leading the charge, I think that that will become a very, very good play, at least in the next three, four months,” Prakash Diwan, Market Expert, told CNBC-TV18 on Monday.
The Nifty IT index is trading 3.4% or 1,150 points higher at 34,510, and has already recovered over 3,500 points from its 52-week low of 30,918, which it fell to last week.
