IT stocks gain up to 5% led by Wipro, Infosys. Is it ECB impact or something else?
IT stocks jumped up to 5% on Friday and were the best sectoral performers catapulting Nifty to the day's high with a 409-point surge. The top contributor to the 50-stock index was Infosys while Wipro occupied the top spot in terms of percentage gains.
Wipro and Persistent gained 5% each, while Infosys jumped over 4%. All 10 shares in the Nifty IT index were in the green. The index also shot up 3.5% to the day's high of 23,230.15.
Coforge, LTIMindtree, Tech Mahindra, MPhasiS, L&T Technology Services, HCL Technologies and Tata Consultancy Services (TCS) gained between 3.85% and 2.13%.
Analyst Nilesh Jain, Assistant Vice-President (AVP) at Equity Research Technical and Derivatives at Centrum Broking sees multiple levers at play. One he said was the IT sector hovering in an oversold category. He said a bounceback was long overdue.
On technical charts, the Nifty IT index has seen a breakout from its 200-day moving average (DMA) and a further near-term upside of 3-4% cannot be ruled out, Jain observed.
The analyst does not see a material impact of a 25 bps rate cut by the European Central Bank (ECB) after a gap of 5 years. European stocks closed in the green on Thursday.
Echoing similar sentiments, analyst Sudeep Shah regarded traction in IT stocks as a short covering by traders along with bargain buying at lower levels. He also sees a very limited role of the ECB’s decision in Friday's spike of the Indian IT stocks. Ahead of the Federal Reserve's FOMC meeting on June 11-12, there could be some of the US Fed taking
