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TCS, Infosys, Wipro, TechM, HCL Tech: IT shares up ahead of Q2 results. What’s next?

In Wednesday’s trading, the tier 1 IT pack was up to 3% in anticipation of Tata Consultancy Services‘ (TCS) quarterly earnings later in the day. Brokerages like JM Financial stated that the current results season is likely to be slightly better than the June quarter, but far from what the majority of players anticipated at the start of the year. The BSE IT index has so far outperformed the Sensex in 2023 by 700 basis points, up 16% year to date.

Investors were eagerly awaiting the management commentary and a potential share buyback, which analysts said might be as large as Rs 20,000 crore, as TCS was trading 0.43 percent higher at Rs 3,644.80 on Wednesday. Infosys Ltd, which is expected to report earnings on Thursday, increased to Rs 1,510.80 by 1.06 percent. At Rs 420.70, Wipro Ltd was up 3.21 percent. HCL Technologies Ltd. increased by 0.85% to Rs. 1,272.20. Tech Mahindra Ltd. (TechM) increased 0.80%. On October 18, Wipro, and Tech Mahindra are slated to release their Q2 earnings reports, followed on October 25 by HCL Tech. The five IT stocks have risen up to 23% for the year so far.

Also read, RBI MPC Meeting LIVE Updates: RBI likely to maintain status quo on repo rate. All eyes on inflation commentary

Growth Ahead for the TCS and others in the IT Sector?

“The original expectation of a pick-up in demand can be blamed for the current spike in IT stock prices. However, it is clear that growth prospects throughout the IT sector are muted, indicating that demand is not aligning with earlier forecasts, after studying Accenture’s results and having conversations with several IT companies, wrote Arihant Capital in a note. Among tier I players, this arrangement favours TCS.

In its preview note, Emkay Global stated that recent increases in IT equities were driven by anticipations of a revival in demand. Although there are still macroeconomic risks, it was stated that the US economy’s resiliency, deal intake and deal pipeline, and the influence of normalizing tech expenditure might boost values and help the economy recover.

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