Nifty IT index hits new 52-week high; 5 high conviction IT stocks set to surge up to 15% in 3 months

(*3*)In its latest report, Motilal Oswal famous that whereas remainder of the sectors posted 20-30% earnings decline in Q1, IT appeared comparatively resilient with 5-10 per cent earnings development.

IT stocks have been in focus in the present day as HCL Tech, Infosys, Mindtree and Wipro shares hit a recent 52-week high. In the intraday offers on BSE, Infosys was the top-performing stock. The Nifty IT index jumped 2.5 per cent to scale a new 52-week high 20,331.60. Out of 10 index constituents, eight have been buying and selling in the optimistic territory in the vary of 0.50-3 per cent. While, in the afternoon offers, Nifty IT index slipped into the crimson, erasing all of the morning features. From its 52-week low, Nifty IT index has surged 85 per cent, in comparability, Nifty 50 has soared 51.67 per cent. Research and brokerage agency Motilal Oswal Financial Services believes that the IT sector will stand-out tall this yr as one of many few sectors so far as July-September earnings are involved. While the remainder of the sectors posted 20-30% earnings decline in Q1, IT appeared comparatively resilient with 5-10% earnings development.

In its latest report, Motilal Oswal famous that whereas remainder of the sectors posted 20-30% earnings decline in Q1, IT appeared comparatively resilient with 5-10 per cent earnings development. The report highlighted that the momentum will proceed in Q2 as effectively particularly after good steering given by few massive and midcap corporations. The brokerage agency expects a sequence of earnings upgrades this quarter (Q2) ranging between 5-10 per cent for large-cap IT names. It listed 7 high conviction concepts from the IT house that are anticipated to do effectively in the brief to medium time period. “One can buy this basket of 7 stocks with a potential upside of 10-15 per cent over a time frame of 1-3 months. The stop loss for the entire basket should be 6-7%,” it added. In its basket of seven stocks, Motilal Oswal has given 25 per cent weightage every to TCS and Infosys.

TCS: TCS shares have been practically one per cent up in an in any other case weak market. Over the medium time period, Motilal Oswal expects the IT agency to be a key beneficiary of the COVID-19-driven improve in know-how depth throughout verticals. It mentioned that continued traction in massive offers, a wholesome pipeline, and higher resilience in BFSI are encouraging elements for Tata Consultancy Services.

Infosys: Infosys shares climbed over 1 per cent to scale a recent 52-week high of Rs 1,030.80 apiece. The stock worth has greater than doubled from its March low of Rs 511 per share. The brokerage agency highlighted that the deal wins and the deal pipeline each remained wholesome. It expects additional enlargement in margins as investments stabilize and back-ended productiveness advantages kick in.

Tech Mahindra: Tech Mahindra shares slipped into crimson after buying and selling in the optimistic territory for many of the previous of the commerce. “We upgrade our EPS estimates over FY21–22E by 17% as we revisit our growth and margin trajectory in light of the surprise in 1QFY21 and optimistic commentary,” Motilal Oswal mentioned in its report.

Wipro: The shares of Wipro hit a new 52-week high of Rs 324 apiece in in the present day’s commerce. The stock has risen 51 per cent since March. The brokerage agency believes Wipro is an efficient re-rating candidate due to the upside of a turnaround beneath the new CEO, the potential for an impending buyback, and comparatively enticing valuations (v/s TCS and Infosys, 13x 1-year ahead P/E) and the potential for massive capital return.

L&T Infotech: Motilal Oswal in its report famous that regardless of the COVID-19 disruption, L&T Infotech’s shopper addition throughout buckets (3 in USD10-20m and 3 in USD5-10m) was sturdy and broad-based in 1QFY21. Industry-leading development plus prudent capital allocation ought to defend its wealthy multiples.

The different two stocks are Mindtree and Coforge, in which the brokerage agency sees a possible upside of up to 15 per cent in three months.

(The stock suggestions in this story are by the respective analysis and brokerage agency. Financial Express Online doesn’t bear any duty for his or her funding recommendation. Please seek the advice of your funding advisor earlier than investing.)

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