IT stocks set Street afire; benchmark indices at lifetime highs

livemint.com:

Wipro Ltd hit 52-week highs, and HCL Technologies Ltd surged to a record high. FPIs net purchased shares worth ₹1,085.72 crore while domestic institutional investors (DIIs) sold shares worth ₹820.69 crore.

These IT companies’ December quarter results released over Thursday and Friday turned out to be better than Street expectations, and investors expect their earnings to improve with interest rates expected to cool worldwide later this year. Despite several brokerages putting ‘sell’ recommendations on Wipro after its earnings announcement, the stock opened at the 10% upper price band of ₹511.95 and rose to a 52-week high of ₹529.

TCS and Infosys also hit their 52-week highs at ₹3,965 and ₹1,664.95, respectively, on high delivery volumes and short-covering in derivatives contracts. HCL Tech hit a record high of ₹1,619.60, also on robust buying.

Wipro and HCL Tech reported their Q3 results on Friday, while the other two posted them on Thursday. The two-day rally in the large-cap tech stocks has enabled the Nifty IT index to post a 28.06% return in the year to 15 January, beating the Nifty’s 23.06% return in the same period.

Asked whether investors could enter tech counters at current levels, Andrew Holland, chief executive officer, Avendus Capital Public Markets Alternate Strategies, said, “Those with a long-term horizon, say, for two years, could, because their results and guidance have been better than what the markets were expecting. Markets are viewing the IT pack with favour in the belief that they’ve seen the worst." Jayesh Bhanushali, lead analyst, IIFL Securities, advises entry in a “staggered manner" as the IT index’s price-to-earnings (P/E) multiple at 26 times FY25 earnings trades 30% above its historic average.