Nifty IT underperforms Nifty 50 in last 1 year; time to take contra bets?
Expert view: General Election 2024 a major trigger, upside looks limited, says Sunil Damania Niraj Kumar, Chief Investment Officer at Future Generali India Life Insurance Company expects the outlook on margins of the Indian IT players to be better aided by the resolution of supply-side challenges, reduced attrition, and reasonable wage increments. “The better growth outlook also stems from the fact that IT spending is now perceived as core to the sustenance of any business and no longer considered discretionary, while emerging business lines like generative AI will also aid growth.
Besides, anticipation of potential rate cuts by the US Fed in 2024 is expected to boost discretionary IT spending in the BFSI space, which is a key segment of the IT sector," said Kumar. Also Read: Expert view: Corporate earnings growth, geopolitical stability key triggers for FY25, says Niraj Kumar However, if the US Fed delays rate cuts and the US macro numbers deteriorate, it will greatly blow the hopes of a revival in the IT sector.
The market now expects three rate cuts from the Fed this year. Also, the March quarter earnings, along with the outlook on revenue and margin, will be among the key factors determining the medium-term performance of Indian IT stocks.
Indian IT players are expected to report modest numbers for the March quarter of the last financial year. Tata Consultancy Services (TCS), the country’s largest software services exporter, will kick start the earnings season for the fourth quarter ended March 2024 on April 12.
Infosys will release its Q4 results on April 18, while HCL Technologies will announce its March quarter earnings on April 26. Also Read: Q4 results preview: IT sector likely to report muted revenue growth
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