Positive TCS outlook triggers rally in large-cap IT stocks
Tata Consultancy Services (TCS) led the rally in large-cap information technology shares, as investors were encouraged by the country's largest software exporter's commentary on the demand outlook after its third-quarter results.
The Nifty IT Index gained 3.4% on Friday, led by a 5% jump in TCS shares. The company posted a 12% increase in net profit in the December quarter compared to the previous year.
All 10 stocks in the Nifty IT Index closed higher. LTI Mindtree surged 4.6% while Tech Mahindra and HCL Technologies gained over 3.6% and 3.2%, respectively. Infosys and Wipro moved up 2.5% each. Infosys and HCL Tech are scheduled to announce their results next week.
«The management commentary on improving demand outlook and deal cycle along with recovery in discretionary spending is a major positive from the TCS results that led to the uptick in the shares today,» said Narendra Solanki, head, fundamental research — investment services, Anand Rathi Shares and Stockbrokers.
CLSA, which upgraded its rating on TCS to outperform from hold and raised its price target to ₹4,546 from ₹4,251, said the stock's valuation is attractive compared to its peers and its five-year history. Morgan Stanley said the 'risk-reward' for the stock was favourable because of valuation.
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