IT stocks were in the spotlight on Thursday, a day after the country's three largest software service exporters - TCS, Infosys and Wipro - reported their quarterly earnings. Investors awaited the financial results of HCL Tech and Mindtree due this week.
The Nifty IT index rose as much as 0.7 percent before giving up nearly all of those gains at the close, as TCS and Infosys investors cheered the latest earnings reports, but Wipro tumbled after the company missed forecasts on most grounds.
Constituents of the index were a mixed bag. TCS and Infosys finished around one percent higher each, and Mindtree up 2.4 percent.
Mphasis was up 2.8 percent and L&T Technologies half a percent.
On the other hand, Wipro fell six percent. Tech Mahindra, HCL Technologies, L&T Infotech and Coforge fell between 0.3 percent and 1.3 percent.
Mindtree will post its Q3 numbers later in the day, and HCL Tech on Friday.
Most analysts have a positive outlook on IT stocks going forward.
"Everybody knows that the IT story is superb," market expert Mehraboon J Irani said in an interaction with CNBC-TV18. "The market has probably given it a thumbs up for the last one and a half years... It is a market where positional traders have made money," he said.
His favourite picks from the IT space are: Infosys, TCS and Wipro. Irani believes investors looking to make another 5-20 percent return over the next year can consider the IT space.
"2022 is also going to be good. The deal wins have been good, attrition rates quite low... If you are happy with the 10-20 percent returns from Wednesday’s closing price over the next 12 months, this is the space possibly to stick with," he added.
IT stocks have powered much of the rally on Dalal Street in the past few months. As of Wednesday's close, the Nifty IT gauge is up 43 percent in the past year, much ahead of the headline Nifty50 index's 25 percent rise.
Here's how the Nifty IT and its members have fared in comparison to the headline index in the past year:
Gautam Trivedi, Co-Founder and Managing Partner at Nepean Capital, said all of the three companies surprised the Street. "Some people may not have liked the higher attrition rate. It suggests how strong the demand is and that’s positive,” he said.
His remarks come as the Indian IT spaces continue to struggle against high attrition rates.
The management of the country's largest IT company, TCS, exuded confidence attrition is expected to stabilise in the coming quarters.
First Published: IST