Nifty IT outperforms Nifty, up 4% in August; what should be your strategy for the IT sector?
Indian market. On the other hand, the Nifty IT pack is set to buck the trend. While the majority of sectoral indices are in the red, the Nifty IT pack is up about 4 per cent this month against a nearly 2 per cent loss in the Nifty index.
Among the index components, shares of Coforge are up over 11 per cent in August, followed by L&T Technology, Persistent Systems and Tech Mahindra, each rising over 7 per cent this month. Shares of LTIMindtree, Infosys and HCL Technologies are up between 4-5 per cent. Index heavyweight TCS is the only stock that is in the red in August, with a loss of one per cent.
The Nifty IT index is set to extend its winning streak into the fourth consecutive month. The improved outlook of the US economy has boosted sentiment for IT stocks. Most experts point out the fresh economic trends in the US which indicated the world's largest economy is unlikely to see a recession in the near future.
Besides, there are expectations that the US Fed will not hike rates from here on as rates are already at their 22-year high level. Another factor is the emergence of artificial emergence (AI) which experts believe will be an integral part of corporates soon. Experts expect IT companies to see strong demand for AI-related work in the near future.
Experts are positive about the prospects of the IT sector and suggest buying quality IT stocks for the long term. "Long-term growth prospects for the IT sector are favourable, but investor enthusiasm has apparently been hampered by the current state of uncertainty in the USA and other major global economies. However, a select group of mid-tier IT firms, such as Coforge, Persistent, L&T Technology, Lti Mindtree, Mphasis, and Tech Mahindra, have significantly outperformed
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