IT stocks staged a broad-based rebound in early trade on Thursday, snapping a two-session losing streak as investors bought into software companies ahead of key June-quarter earnings and after softer US inflation data boosted sentiment towards the technology sector.
The Nifty IT index climbed 0.94% to 28,799.25 in morning trade, while the BSE Information Technology index rose 0.74% to 27,883.81.
The rally also helped lift the benchmark indices. The Sensex was up 184.38 points, or 0.24%, at 77,369.81, while the Nifty50 gained 42.40 points, or 0.18%, to 24,120.90.
HCLTECH LEADS RALLY
HCLTech emerged as the biggest gainer among Nifty IT constituents, rising 2.12% to Rs 1,192.80. Tech Mahindra advanced 1.40%, LTIMindtree gained 1.36%, while Wipro and Mphasis rose 1.14% each. Oracle Financial Services Software (OFSS) added just over 1%.
On the broader BSE IT index, LTTS led the gains with a 2.92% jump, followed by HCLTech (2.14%), Zensar Technologies (2.18%), Birlasoft (1.61%), ASM Technologies (1.51%), Tech Mahindra (1.34%), Datamatics (1.31%), LTIMindtree (1.30%), Newgen Software (1.27%), Mastek (1.26%), MosChip Technologies (1.21%), Rashi Peripherals (1.20%), Wipro (1.15%), Mphasis (0.97%), Tata Elxsi (0.92%), OFSS (0.90%), Persistent Systems (1.02%), Infosys (0.69%) and TCS (0.28%).
Only a handful of IT stocks traded lower, including IKS Health (-1.20%), D-Link India (-1.21%), Netweb Technologies (-1.36%), Ivalue InfoSolutions (-1.39%), RateGain Travel Technologies (-1.41%), 63 Moons Technologies (-1.53%), KSolves India (-1.80%), Subex (-2.38%), Silver Touch Technologies (-2.65%) and Orient Technologies (-3.14%).
EARNINGS, GLOBAL CUES DRIVE SENTIMENT
The rally comes ahead of June-quarter earnings from Wipro and Tech Mahindra later in the day. Investors are positioning for the results after TCS and HCLTech kicked off the earnings season last week.
Another factor supporting IT shares was softer-than-expected US inflation data, which eased concerns over aggressive interest rate hikes by the US Federal Reserve. Lower interest rate expectations are generally positive for technology companies as they improve the outlook for corporate spending and future earnings.
Reuters reported that IT stocks had fallen about 1.7% over the previous two sessions, making Thursday’s gains a recovery move led by expectations around earnings.
GEOPOLITICAL RISKS KEEP GAINS IN CHECK
Despite the rally in IT stocks, broader market gains remained limited as geopolitical tensions in the Middle East continued to weigh on sentiment.
The US struck Iran’s coastal defences and missile sites on Wednesday after reimposing a naval blockade of Iranian ports, while Iran threatened to disrupt more regional energy exports, keeping investors cautious.
Even so, 10 of the 16 major sectoral indices traded in the green. Apart from IT, consumer durables gained 1.74%, chemicals rose 0.67% and auto stocks added 0.63%, while financial services, realty and PSU banks traded marginally lower.
