Indian IT stocks rally on rate cut hopes
BENGALURU, INDIA — Top Indian IT stocks, including Infosys, Tata Consultancy Services (TCS), and Wipro, gained more than 1% each on January 5th, driven by optimism that the Reserve Bank of India’s (RBI) interest rate hike cycle may be ending soon.
The gains in Infosys, TCS, and Wipro shares — along with LTIMindtree and HCL Technologies — also boosted the Nifty IT index by 1%.
In a report by Moneycontrol.com, Geojit Financial Services Research Analyst Vinod TP cited “optimism driven by an anticipated end to rate tightening,” which could potentially restart delayed IT projects.
However, other experts expect muted December quarter results for the sector due to economic uncertainties.
While the October-December period is seasonally weak for Indian IT companies, additional headwinds like high inflation, sluggish growth, and potential delays in client spending are likely to have compounded the impact this quarter.
Infosys will report its Q3 earnings on Jan 11th. Tier-1 IT services firms are predicted to post subdued 1.4-1.6% constant currency revenue growth this quarter, as per Elara Securities. HCL Technologies, meanwhile, is expected to outperform with around 4.8% growth.
Despite near-term challenges, the recent stock price rallies indicate investor expectations of a recovery in Indian IT spending in 2024 as macro pressures eventually ease. Infosys remains analysts’ preferred pick, given its reasonable valuations and upside potential.
