Macquarie has turned bullish on IT space and named HCL Tech, TCS, Infosys as its top picks. This as experts just a week back voiced that the sector was in a deep bear zone due to fears of slowing global growth.
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The Nifty IT has fallen close to 25% since the start of the year and multiple downgrades
Now, the Macquarie report says that the worries over demand are overdone and that the S&P 500 revenue and technology spending correlation with IT services is not going to hold as IT spending is expected to be far more resilient.
Macquarie's pecking order starts with HCL Tech, TCS, Infosys, Wipro, and then Tech Mahindra. It has an ‘outperform’ across the board for the large-cap IT names.
Along with this the margin outlook has improved with the INR depreciation and company managements have said post their fourth-quarter results that attrition will likely moderate.
Macquarie as the table shows above has upgraded Wipro to an ‘outperform’ with a target price of Rs 955 while Tata Consultancy Services (TCS) and HCL Technologies are their top picks.
It is noteworthy that Nomura, had recently downgraded TCS, Wipro, HCL Tech, L&T Infotech and Persistent and kept only only two stocks in the 'buy' rating category: Infosys and Tech Mahindra.