Large-cap IT stocks in catch-up mode manage to hold firm
Information Technology companies such as TCS and Infosys firmed up in Tuesday's trading, bucking the broader weakness in the market, as investors and traders perceive these shares as defensive bets if sentiment sours further. The Nifty IT Index jumped 1% on Tuesday, while the benchmark Nifty ended almost flat.
The gains in IT stocks on Tuesday were restricted to blue-chips.
Nifty Midcap 150 dropped 3%, Nifty Small-cap 250 fell 3.9% and Nifty Microcap 250 declined 5.2%
«The reason the market saw no panic selling is there is low trader interest and positioning in these stocks, in the segment,» said Rohit Srivastava, Founder, Indiacharts.com. «IT is going to do better backed by a good global tech environment and strong NASDAQ, and will continue to pick up.»
On Tuesday, most of the gains in the IT stocks were restricted TCS gained 2.6% and Infosys moved up 1.7%.
Wipro ended flat. Most mid-cap and small-cap IT stocks sank in the trading session.
«There was a broad underperformance in large-cap IT in the last few months even as NASDAQ had a good rally and moved up,» said Ruchit Jain, Lead Research Analyst at 5Paisa Capital.
«The IT and tech stocks didn't fall due to the catch-up move.»
With the Nifty IT index crossing the 32,000 mark in September for the first time since May 2022, Jain expects the index to go up to as high as 34,500- 35,000. This implies an upside of up to 6.1% from Tuesday's closing of 32,977.90
IT stocks have mostly underperformed the market in the past six months as concerns over a business slowdown in developed markets weighed down sentiment.
