Contra bet? IT stocks shrug off earnings growth risks, outpace Nifty 50 in H1FY24

economictimes.indiatimes.com:

Nifty 50 has net gained more than 13%, and one sector that has contributed significantly to this is the information technology pack despite the hullabaloo around global slowdown and earnings growth risks for the sector.
The outperformance of IT stocks, which enjoy the second highest weightage in Nifty 50, to banks, has helped the 50-stock index move past the psychologically-crucial 20000-mark.
In the first half of FY24, while the Nifty IT index has gained 11%, Nifty Bank has added over 9%.
Of the 10 constituents of the Nifty IT index, eight of them have given double-digit returns in the April-September period.
One must note that the stellar gains in stocks have come even after most technology majors gave a bleak outlook for earnings growth in FY24 amid the economic slowdown in the US and Europe.

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The trading pattern in the IT stocks in the derivatives segment, particularly in the last three series suggests that the majority of the gains were on the back of covering short positions.
After seeing major short covering in the July and August derivative series, IT stocks saw fresh build-up of long positions in the September series, said derivative analysts.
The short covering-led rally, followed by fresh bullish positions saw the Nifty IT index breach the crucial 31500 points during the September series. In the September derivative series, Nifty IT gained more than 2%, outperforming Nifty 50, which gained 1%.
Most of the bullish positions have been carried forward to the October series, as the sector saw high rollovers.

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