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Informist, Friday, Feb 7, 2025

MUMBAI - Shares of information technology companies are likely to see muted gains next week in the absence of major cues on the domestic front. Investors will continue to focus on US policies with respect to tariffs and others, if any, in the coming days. Worries related to higher competition from Chinese startup DeepSeek's new artificial intelligence model 'R1' have subsided and analysts are bullish that similar models would be introduced in India, which could help companies reduce their costs significantly. 

"R1's pricing is a fraction of (OpenAI's) O1. Latency is better as well, signifying that it may have been significantly cheaper to train and is more efficient in reasoning compared with R1," Kotak Institutional Equities said in its report dated Monday. DeepSeek R1 is an example where improvement in reasoning by the first-generation OpenAI model seems to be reproduced with a similar level of performance, it said. 

On other hand, there are some worries that the Donald Trump administration's tariff policies, if implemented, could push US inflation higher, which will most likely lead to a slowdown in rate cuts in the country. If so, this may hit sentiment towards IT companies in India, whose major share of revenue is earned from clients in the US. For more than a year, the sector has felt the heat of high interest rates, sharp cut in discretionary spending, and weak demand.

However, recent comments by management of most IT companies indicated that these trends are reversing and they sounded optimistic about the quarters to come. This led to an upward revision in earnings growth guidance for the current financial year by some major players, including Infosys, HCL Technologies, and US-based Accenture. On the earnings front, most IT companies have released their quarterly results, including the five bluechip players which are part of the Nifty 50. 

TOP HEADLINES
* Sonata Software posts consol PAT of INR 1.05 bln Oct-Dec vs loss year ago
* HCL Tech collaborates with ChargePoint for EV charging technologies
* Data Patterns Oct-Dec net profit falls 12.4% on year, sales down 16.1%
* Cyient, Japan-based Micware Navigations sign MoU for mobility solutions
* Telangana HC quashes tax litigation of INR 26.08 bln against Tech Mahindra
* Happiest Minds Oct-Dec consol PAT, revenue up 1.2% on qtr at INR 501 mln
* RattanIndia Ent posts INR 1.7 billion consol loss in Oct-Dec vs PAT year ago
* L&T Tech's Smart World joins Arizona Tech to scale up smart city solutions
* Newgen Software Technologies bags order worth INR 129.18 mln

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:

End

Reported by Anjana Therese Antony
Edited by Akul Nishant Akhoury

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