Stock market today: Why IT stocks are rising ahead of TCS Q3 results?

Stock market today: Ahead of TCS Q3 results, IT stocks are witnessing huge buying interest since early morning deals. IT majors such as Infosys, HCL Tech, Firstsource Solutions, Tech Mahindra and even TCS shares are up by a handsome margin from its Friday close. Infosys shares are up by around 2.35 per cent, HCL Tech share price has gained to the tune 3 per cent while Tech Mahindra share price today ascended to the tune of over 2.50 per cent. Even TCS share price registered sharp upside rally and logged around 2.75 per cent rise in intraday session on Monday. 

Nifty IT index surged over 2.50 per cent on Monday, fueling speculations about strong guidance by TCS after the announcement of Q3 results.

According to stock market experts, market has already discounted the subdued to negative preview of the IT companies ahead of results season. Now, the market is expecting flat to positive guidance from the IT companies. This may begun from today’s TCS Q3 results and hence, IT stocks are rising ahead of the TCS results. 

They said that Nifty IT index is trading in 27,000 to 31,000 range and it may become highly bullish once it breaks the upper hurdle. On breakage of this hurdle, the index may go up to 37,000 levels in near term, they said. However, they maintained that large-cap stocks will witness buying interest in early phase of rally while it will trickle down towards mid-cap and small-cap IT stocks later.

Speaking on the reason for rise in IT stocks ahead of TCS Q3 results, Ravi Singhal, CEO at GCL Securities said, “The Dalal Street has already discounted after subdued to negative preview ahead of the beginning of results season. Now, ahead of TCS Q3 results, market is expecting sideways to positive guidance from TCS that may impact gross margin ratio of IT shares positively. If this happens, we can expect the same getting repeated by other IT giants like Infosys, HCL Tech, Wipro, TechM, etc. So, much will depend upon the kind of guidance TCS presents after the announcement of its Q3 results.”

On important levels to watch in regard to Nifty IT index, Anuj Gupta, Vice President — research at IIFL Securities said, “Nifty IT index is sideways in 27,000 to 31,000 range. Bullish or bearish trend in Nifty IT index can be assumed only on breakage of either side of the range. However, possibility of downside in IT stocks are limited as it has already under the base building mode after the outbreak of Russia-Ukraine crisis. So, one should look at any dip in quality large-cap IT stock in upcoming sessions as buying opportunity.”

Ravi Singhal of GCL Securities said that initially the rally will take place in large-cap IT stocks whereas it will later on trickle into the mid-cap and small-cap IT stocks.

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before taking any investment decisions.

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