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Infosys 4th Indian company to hit $100 billion market value as shares soar

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IT shares such as Infosys have been at the forefront of the latest bout of rally over the past few months.

Infosys 4th Indian company to hit $100 billion market value as shares soar
Infosys shares touched a record high on Tuesday, helping the IT major become the fourth company in India to enter the $100 billion club in terms of market capitalisation. Infosys shares rose 0.94 percent to a record high of Rs 1,739.20 apiece on BSE, helping the country's second-largest IT services exporter touch a market value (mcap) of Rs 7.45 lakh crore ($100.64 billion at $1 = Rs 74).
With that, Infosys became the fourth Indian company to reach the milestone, after Reliance Industries (Rs 13.96 lakh crore), Tata Consultancy Services (Rs 13.40 lakh crore) and HDFC Bank (Rs 8.50 lakh crore).
Infosys shares traded flat at Rs 1,737.40 apiece on the bourse in late morning deals. At the time, the IT behemoth's market value stood at Rs 7.37 lakh crore.
Many analysts are positive on IT companies from a long-term perspective despite the stretched valuations in the sector. Among them is AK Prabhakar, Head of Research at IDBI Capital.
"The kind of order books and pipelines that Indian IT companies have today, they are likely to do well going forward. Attrition is likely to remain high and valuation-wise, everything has gone beyond what anyone could have imagined 2-3 years ago... The lockdown has opened up lots of avenues for IT companies," he told CNBCTV18.com.
IT shares have been at the forefront of the latest bout of the rally over the past few months.
“In the context of how market dynamics are playing out currently, clearly, technology services as a sector could be essentially be the safe hiding spot and the concerns that are there globally are all around liquidity, inflation, rate hikes and all of that," Nilesh Shah, Founder and CEO of Envision Capital, told CNBC-TV18.
As of Monday's close, the Infosys stock has surged as much as 193 percent so far since the pandemic lows of March 2020, and is up 38 percent so far in 2021. It has easily beaten the 16 percent return of headline index Sensex on a year-to-date basis. The 30-scrip benchmark has rebounded 108 percent since March last year.
"Infosys in general has seen a sharp rally over the past few weeks... From a short-term view, there is a shift taking place from IT to the banking space. Money will soon start to chase banking shares and some profit booking can take place broadly in IT," Ashish Chaturmohta, Head-Technicals and Derivatives at Sanctum Wealth Management, told CNBCTV18.com.
Prabhakar is upbeat on the impact of the pandemic on IT businesses.
"In India, now everything is being switched to digital mode. Education is on digital... So the demand for IT remains too high and might continue even going forward," he said.
"Once you switch to digital, you cannot go back to the way you were... If you have a mobile today, can you go back to not having it?" he quipped.
"IT services still continue to have a very stable demand environment; margins are intact, or probably they could soften a bit, but, by large, intact, strong cash flows, and valuations, which of course have kind of moved up... but they are not as expensive as I would look at the other pocket of safety such as consumer names,” Shah added.
What do charts suggest?
Technically, Infosys faces stiff resistance at Rs 1,760 and levels of Rs 1,650-1,640 can be seen in the next couple of sessions, said Chaturmohta.
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