IT stocks, including TCS, Infosys, HCL Tech, and Tech Mahindra, traded with healthy gains in early trade on Friday, June 7, boosting their sectoral index, Nifty IT.
The Nifty IT index was 2 per cent up, while the equity benchmark Nifty 50 was 0.5 per cent up at 9:40 am.
Shares of Wipro, Mphasis and Coforge and Persistent Systems were almost 4 per cent, while those of Infosys, Tech Mahindra, HCL Tech and TCS were up 1-2 per cent at that time.
The IT pack has been in the green for the last three consecutive sessions. On June 5, the index jumped 2.39 per cent, and on June 6, it gained 2.83 per cent.
Experts say most IT stocks are gaining as investors rotate money and play defensive due to the uncertainty surrounding the new government formation.
“Most market participants are trying to be defensive because of uncertainty on the government formation front. While it is clear that the BJP-led NDA will form the government, it is not clear yet who will get which ministry. In times of uncertainty, defensive sectors tend to gain,” said Avinash Gorakshkar, Head of Research at Profitmart Securities.
Gorakshkar also observed some green shoots in the US and Europe, which are helping IT stocks and investors anticipate some value emerging in the sector. However, this is just a small beginning, not a trend confirmation. Gorakshkar believes a clear trend for the IT sector will emerge only after the June quarter earnings and management commentaries on the demand outlook.
Saurabh Jain, vice president of research at SMC Global Securities, underscored that investors are moving their money from overbought to discounted segments amid market volatility. This boosts defensive segments like IT, FMCG, auto, and pharma.
Also Read: Persistent, Coforge to HCL Tech: Why are IT stocks skyrocketing?
(More to come)
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Published: 07 Jun 2024, 09:52 AM IST
