IT Stocks Outlook
Seen consolidating next week; TCS earnings in focus
This story was originally published at 18:53 IST on 3 January 2025
Register to read our real-time news.Informist, Friday, Jan. 3, 2025
MUMBAI – Shares of information technology companies may continue to consolidate next week, taking cues from Oct-Dec earnings announcements, according to analysts. The IT companies are expected to report mixed performance for the quarter, with mid-cap companies expected to outperform large-cap firms in terms of revenue growth. Tata Consultancy Services will kick-start the Oct-Dec earnings season on Jan 9.
Most large-cap IT companies, barring HCL Technologies, are expected to report negative to flat sequential growth in revenue for Oct-Dec, while mid-cap firms are projected to perform better. The management commentary around demand is also unlikely to be drastically different from the past few quarters, according to brokerage reports.
According to Nomura Research, the financial year 2024-25 (Apr-Mar) is likely to mark the bottom of revenue growth for Indian IT companies. A strong recovery in discretionary demand may take a few more quarters, but the situation is unlikely to worsen further, the broking firm said. The onset of the interest rate-cutting cycle and a potential thaw in decision-making by US corporations after the elections that took place in November could provide a fillip to demand. The recent results of Accenture indicate the likelihood of revenue improvement for IT services companies in FY26, the brokerage said in a report.
The rupee's recent slide against the dollar is also seen working in favour of some domestic IT companies in the December quarter, whose revenue share from clients in the world's largest economy is around 60%, analysts said.
This week, the Nifty IT index closed flat at 43726.55 points. By comparison, the benchmark Nifty 50 and BSE Sensex closed 0.8% and 0.7% higher, respectively. Of the 10 constituents of the IT index, six gained over the week, while the rest closed lower. HCL Technologies and Coforge were among the top gainers. Wipro and Tata Consultancy were among the worst performers. Next week, support for the IT index is seen at 43090.70 and resistance at 44655.10 points.
"The Nifty IT index exhibited a mixed trend throughout the week, ultimately closing on a flat note while forming a candlestick pattern known as a 'Doji,' signalling uncertainty," said Rajesh Bhosale, technical analyst at Angel One. "Based on the pattern's characteristics, no clear trend can be identified for the near term. The index is likely to be in the range of 42,500 to 44,500 (points) before any decisive momentum emerges."
According to Motilal Oswal Financial Services Ltd.'s Ruchit Jain, there are no signs of resumption of the uptrend in the IT space. The Nifty IT index has entered a corrective phase after rallying to the 46000 points level till mid-December from the 40200 level at the start of November. The index is expected to see some consolidation in the near term on account of mixed earnings.
TOP HEADLINES
* Newgen Software gets four orders worth INR 616.75 mln
* Elon Musk shifts stance on H-1B visa system, suggests its overhaul
* PRESS: Govt plans to double subsidy for chip design to INR 300 mln
* IPO Alert: iValue Infosolutions gets SEBI approval for 18.74 mln shares OFS
* Sources: Cognizant gets all approvals for tech-fin unit at GIFT City
* IPO Alert: Seshaasai Tech files DRHP with SEBI for fresh issue, OFS
* Coforge board approves merger of Cigniti Technologies with co
* Reddy resigns as CTO of Computer Age Management Svcs due to personal reasons
Following are the resistance and support levels for the sector's key stocks for next week, as per calculations based on their prices on the National Stock Exchange:
| Company | Price | Week-on-week change in % | Resistance | Support |
|---|---|---|---|---|
| Coforge Ltd. | 9669.65 | 2.30 | 9862.50 | 9434.60 |
| HCL Technologies Ltd. | 1946.65 | 2.90 | 2011.00 | 1908.80 |
| Infosys Ltd. | 1938.75 | 1.20 | 1968.90 | 1907.00 |
| L&T Technology Services Ltd. | 4795.50 | 2.20 | 4930.50 | 4694.20 |
| LTIMindtree Ltd. | 5733.40 | 1.00 | 5817.80 | 5657.80 |
| Mphasis Ltd. | 2869.25 | (-)0.50 | 2947.10 | 2793.10 |
| Persistent Systems Ltd. | 6405.95 | 0.20 | 6631.30 | 6199.00 |
| Tata Consultancy Services Ltd. | 4099.90 | (-)1.60 | 4211.70 | 4036.40 |
| Tech Mahindra Ltd. | 1689.45 | (-)1.30 | 1748.70 | 1651.70 |
| Wipro Ltd. | 294.45 | (-)4.70 | 307.20 | 287.60 |
| Nifty IT | 43726.55 | 0.00 | 44655.10 | 43090.70 |
| Nifty 50 | 24004.75 | 0.80 | 24279.50 | 23838.60 |
| BSE Sensex | 79223.11 | 0.70 | 80431.90 | 78505.40 |
End
Reported by Darshan Nakhwa
Edited by Rajeev Pai
For users of real-time market data terminals, Informist news is available exclusively on the NSE Cogencis WorkStation.
Cogencis news is now Informist news. This follows the acquisition of Cogencis Information Services Ltd by NSE Data & Analytics Ltd, a 100% subsidiary of the National Stock Exchange of India Ltd. As a part of the transaction, the news department of Cogencis has been sold to Informist Media Pvt Ltd.
Informist Media Tel +91 (22) 6985-4000
Send comments to feedback@informistmedia.com
© Informist Media Pvt. Ltd. 2024. All rights reserved.
To read more please subscribe
Share this Story:
