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TCS, Infosys, Wipro, other IT stocks rise ahead of Q3 earnings

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TCS, Infosys, Wipro, HCL Technologies and Mindtree rose along with other IT stocks on Tuesday, ahead of their Q3 results due this week. The 10-scrip Nifty IT index gained one percent -- its biggest single-day rise in more than a week.

TCS, Infosys, Wipro, other IT stocks rise ahead of Q3 earnings
TCS, Infosys, and Wipro rose on Tuesday ahead of quarterly earnings announcements by the three IT majors due this week. Most other IT shares were also in demand as investors awaited the onset of the corporate earnings season. The three IT service providers are due to report their financial results for the October-December period on Wednesday.
TCS, Infosys and Wipro shares finished the day with gains of up to 0.9 percent. The 10-scrip Nifty IT index rose one percent -- its biggest single-day rise since January 3. All its constituents were in the green.
HCL Technologies rose 4.3 percent and Mindtree 0.6 percent. The companies are due to report their Q3 results on Thursday and Friday respectively.
Among other gainers were Tech Mahindra, Coforge, L&T Infotech, L&T Tech and Mphasis, gaining between 0.2 percent and 3.3 percent.
CLSA remains positive on the IT sector, with a bias for large-cap companies. Deal activity in the sector continues to be robust with the October-December period being the second-best quarter in terms of large deal awards, the brokerage said.
It believes that an incremental surprise in 2022 could be from margin expansion with visible leverage from a broadening employee pyramid even as supply-side pressures ease. "This should sustain upgrades to consensus earnings estimates. Thus, while sector valuations are optically rich, we expect them to remain elevated, given growth visibility," the brokerage added.
The IT basket has outperformed the headline indices in the past year.
IndexReturn (%)
Nifty5024.7
Nifty IT42.8
S&P BSE Teck36.6
A blockbuster earnings season coming?
Dipan Mehta, Director at Elixir Equities, told CNBC-TV18 he finds HCL Tech and Tech Mahindra interesting at the current juncture and expects Tata Elxsi, L&T Tech and Intellect Design to post interesting quarterly numbers.
"By and large, I think it is going to be a blockbuster quarterly season for all software companies, be it large-cap or mid-cap; it will reinforce the kind of conviction that we and a lot of other players have in the market: Software is going to be the clear outperforming sector in 2022," he said.
More than actual numbers, the focus will be on deal flows, attrition rates and guidance, Mehta added.
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