HomeMarket NewsThe reasons behind Infosys, TCS, Wipro shares surging despite tepid management commentary: Explained
The reasons behind Infosys, TCS, Wipro shares surging despite tepid management commentary: Explained
At the Morgan Stanley India Investor Forum 2024, TCS told the brokerage that there is no change in the demand outlook, although margins may see a positive bias in the current financial year.
IT stocks Infosys, Wipro and Tech Mahindra are among the top gainers on the Nifty 50 on Thursday. The Nifty IT index is also among the top sectoral gainers. Multiple factors keep the sector in the spotlight.
Overnight, the US Federal Reserve left interest rates unchanged but guided for one rate cut for the rest of the year. However, Fed Chair Jerome Powell's commentary suggested that there might be room to cut rates twice in the second half of 2024.
The US markets cheered a dovish Fed, with the Nasdaq and the S&P 500 hitting record highs, rising for the third day in a row. With this, the Nasdaq composite is up 17% so far in 2024. In comparison, the Nifty IT has been an underperformer, declining 2.7% during the first six months of the year.
IT stocks are also in the news on the back of recent deal wins among companies. Wipro recently won a $500 million deal, while HCLTech signed a deal worth $278 million with Germany's largest private cooperative bank. Brokerage firm Morgan Stanley said that with signs of discretionary demand picking up still absent, such deal wins give them comfort that HCLTech will manage to meet its guidance for financial year 2025.
On the flip side, LTIMindtree said that while the near-term may see some positive momentum, their EBIT margin aspiration of 17% to 18% levels may get pushed further.
Infosys also echoed the absence of discretionary demand but said that deal pipeline in the other segments remains strong. The management also said that the deals that it won in the recent quarters have started converting into revenue.
Morgan Stanley is "overweight" on both TCS and Infosys, while it is "equalweight" on LTIMindtree.
The Nifty IT index is trading 1.5% higher with all the index constituents trading with gains.
Also Read: US Fed Meeting Highlights: Fed holds rates steady, signals only one rate cut expected this year
Overnight, the US Federal Reserve left interest rates unchanged but guided for one rate cut for the rest of the year. However, Fed Chair Jerome Powell's commentary suggested that there might be room to cut rates twice in the second half of 2024.
The US markets cheered a dovish Fed, with the Nasdaq and the S&P 500 hitting record highs, rising for the third day in a row. With this, the Nasdaq composite is up 17% so far in 2024. In comparison, the Nifty IT has been an underperformer, declining 2.7% during the first six months of the year.
IT stocks are also in the news on the back of recent deal wins among companies. Wipro recently won a $500 million deal, while HCLTech signed a deal worth $278 million with Germany's largest private cooperative bank. Brokerage firm Morgan Stanley said that with signs of discretionary demand picking up still absent, such deal wins give them comfort that HCLTech will manage to meet its guidance for financial year 2025.
At the Morgan Stanley India Investor Forum 2024, TCS told the brokerage that there is no change in the demand outlook, although margins may see a positive bias in the current financial year.
On the flip side, LTIMindtree said that while the near-term may see some positive momentum, their EBIT margin aspiration of 17% to 18% levels may get pushed further.
Infosys also echoed the absence of discretionary demand but said that deal pipeline in the other segments remains strong. The management also said that the deals that it won in the recent quarters have started converting into revenue.
Morgan Stanley is "overweight" on both TCS and Infosys, while it is "equalweight" on LTIMindtree.
The Nifty IT index is trading 1.5% higher with all the index constituents trading with gains.
Also Read: US Fed Meeting Highlights: Fed holds rates steady, signals only one rate cut expected this year
(Edited by : SonalMohan Jadhav)
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