IT Sector outlook: Tracking weakness in the US market, Information Technology (IT) stocks fell the most on the benchmarks on Wednesday.
TCS, Infosys, Wipro, Tech Mahindra, HCL Tech share target price: Tracking weakness in the US market, Information Technology (IT) stocks fell the most on the benchmarks on Wednesday. The Nifty IT index declined almost four percent, led by a big drop in share price of tech stocks, such as Tata Consultancy Services (TCS), Infosys, Tech Mahindra and HCL Tech. Meanwhile, brokerage houses were divided on the sector and maintained a contrary stance on IT stocks and the sector in general.
In Bulls Vs Bear comparison, Zee Business Research analysts Kushal Gupta and Varun Dubey explained why the brokerages hold opposite takes on the sector
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IT Secor: Bull scenario
As per Kushal, who cited global brokerages, the management is of the view that there was not much pressure on deal pipeline and client budget now. Besides, from January 2022 high level, major tech stocks have already corrected 20-40% and are available at attractive valuation. He also said that attrition has also been factored in as it has already peaked. Global brokerage firm Macquarie still maintains overweight stance on Indian IT sector.
Macquarie on Infosys (CMP: 1545)
Maintain Outperform, Target 1870
Macquarie on Wipro (CMP: 423)
Maintain Outperform, Target 540
IT Sector: Bear Scenario
As per Varun Dubey, who cited Goldman Sachs, amid rising cost in CY23, IT budget of clients are likely to affected going forward. The brokerage house downgraded TCS and Infosys to ‘Sell’ from buy’. It cited a potential slowdown in dollar revenue growth amid impending macroeconomic stress. It was of the view that valuation of IT stocks is still on the higher side, while pressure on margins of IT companies is likely to persist.
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Goldman Sachs on TCS (CMP: 3229)
Downgrade to Sell from Buy, Target cut to 2611 from 3678
Goldman Sachs on Tech Mahindra (CMP: 1147)
Downgrade to Sell from Neutral, Target cut to 868 from 979
Goldman Sachs on HCL Technologies (CMP: 955)
Maintain Neutral, Target cut to 826 from 976
Earlier, on Monday, Santosh Meena, Head of Research, Swastika Investmart Ltd, said IT stocks are seeing some bargain buying after a healthy correction.
Indian markets are near their all-time high, however, IT stocks are trading much below their 52-week highs, therefore we are seeing some buying at lower levels, he said.
“FIIs are in buying mood and they are showing some interest in beaten-down IT names as global cues are also improving,” he added.
