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Informist, Wednesday, Apr. 23, 2025

By Anjana Therese Antony

MUMBAI – Bulls continue to bet on further upside for most information technology stocks in India amid an ease in worries about US tariffs and better-than-expected quarterly financial results as well as sales outlook of IT companies for 2025-26 (Apr-Mar). US Treasury Secretary Scott Bessent on Tuesday hinted at possible 'de-escalation' in the trade tensions with China soon, which came as a relief for equity investors who have been worried about a possible recession in the US due to the tariff war. Adding to the hope was US President Donald Trump's comments that the US would be very nice to China. Any threat to the US economy will have a ripple effect on Indian IT companies as their major share of revenue comes from the world's largest economy. 

Shares of domestic IT players mirrored overnight gains in their US peers and the Nifty IT closed 4.3% higher at 35414.65 points, becoming the top sectoral gainer Wednesday. All 10 constituents of the IT index closed in the green, with HCL Technologies ending nearly 8% higher and emerging as the top gainer. Despite HCL Technologies' quarterly results not being on par with the Street's expectations, the stock surged on better earnings growth expectations for FY26. The company guided for a 2-5% growth in sales in the current financial year in constant currency terms, which is better than its industry peers such as Infosys and Wipro. 

Shares of HCL Technologies closed 7.7% higher at INR 1,594 Wednesday on the National Stock Exchange. In its options chain, premiums on INR 1,600-INR 1,800 call options expiring in May rose 190%, while those on INR 1,580-INR 1,400 put strikes declined 58-74%. The highest addition of open interest was at INR 1,600 call and INR 1,560 put contracts. The futures contract of the company also indicates near-term bullishness, with open interest of the May series rising 41% to 13.49 million. Similar was the case with Infosys, Wipro, and Tata Consultancy Services, where premiums on out-of-the-money call options rose, while those on put strikes declined.

Tech Mahindra's shares closed nearly 5% higher at INR 1,439.60 ahead of likely muted quarterly results due Thursday. The company's revenue in constant currency terms is likely to decline due to weakness in the hi-tech industry and a couple of other segments, and low demand in the business process outsourcing segment, broking firms said in their earnings preview reports for the March quarter. Tech Mahindra is likely to report an 8% sequential growth in its consolidated net profit to INR 10.63 billion and revenue is seen rising only 1.1% to INR 134.36 billion, according to the average of estimates of 20 brokerage firms.

"After a strong upmove, stock (Tech Mahindra) is near to resistance of INR 1,470," Emkay Global Financial Services said in a note. The broking firm expects the company's revenue in dollar terms to decline 0.9% sequentially after factoring in cross-currency headwinds of 60 basis points. "We estimate EBIT (earnings before interest and text) margin to be flattish sequentially despite wage hike," it said. 

Gains in IT stocks pushed the benchmark Nifty 50 index higher by 0.4%. The index closed 0.7% higher at 24328.95 points after hitting its four-month high of 24359.30 points, up for the seventh session in a row. Though the market continued its northward journey, it underperformed global peers, which gained at least 1% Wednesday. Derivatives analysts said that the domestic equity market is likely to see some selling pressure in the near term as investors are expected to book some of their profits. However, foreign investors are shifting their focus back to India as they now consider the country as a safe haven because valuations have reached comfortable levels. 

--Nifty 50 Apr closed at 24306.90, up 137.90 points; 22.05-point discount to the spot index

--Nifty 50 May closed at 24438.80, up 135.40 points; 109.85-point premium to the spot index

--Nifty 50 Jun closed at 24548.00, up 133.70 points; 219.05-point premium to the spot index

HDFC Bank, ICICI Bank, Reliance Industries, Infosys, Bajaj Finance, Tata Consultancy Services, Bharti Airtel, Axis Bank, State Bank of India, Tata Motors, Mahindra & Mahindra, HCL Technologies, ITC, Kotak Mahindra Bank, Larsen & Toubro, Oil and Natural Gas Corp., and Dixon Technologies (India) were the most active underlying stocks Wednesday.  End

Edited by Tanima Banerjee

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