IT stocks moved in tandem with the market and have bounced back to become investors’ favourites. While the markets closed higher by about 2 per cent, the IT index ended the day higher by 1.64 per cent.
Shares in IT heavyweight Tata Consultancy Services (TCS), touched a new high during intra-day trade and closed at Rs 1,385.90, up 0.70 per cent from its previous close on the BSE. Deutsche Bank assigned a ‘Buy’ rating to the stock with one year price target of Rs 1,450. Deutsche Bank preferred TCS over Infosys, as “TCS will continue to report sector leading growth rates. This along with better near term business visibility makes the stock ideally placed to meet/exceed expectations.”
The gains in the IT sector were also aided by the weak rupee. “Most of the IT stocks have touched fair valuations now. After good first quarter results there has been no negative news in the market and demand in the IT sector is also stable. The weak rupee, in the last month, also helped the stocks gain,” said Ankita Somani, IT analyst, Angel Broking.
The stock of software major Infosys also gained by 2.5 per cent to close at Rs 2,483 on the BSE. However, research houses are assigning a ‘Hold’ rating to Infosys. Citigroup, however, recommended a buy on Infosys with a price target of Rs 2,710 following the
HCL Technologies ended the day at Rs 576, up 1.45 per cent on the BSE.
“With the ECB announcement of the unlimited bond buying program, there has been slight hope that the Euro-zone problems will be solved. As far as performance is concerned, mid cap IT stocks will perform much better than the large caps – as seen in the first quarter results,” said Gaurang Shah, Asst VP, BNP Geojit Paribas.
Mid-cap IT stocks like CMC closed at Rs 978.75, up 1 per cent, Zensar Technologies closed at Rs 253, up 1.14 per cent and Hexaware Technologies ended the day at Rs 132.40, up 2.91 per cent on the BSE.