IT Stocks Rebound After 3-Day Fall; Coforge, Persistent Systems Rise Up To 2.5% In Trade
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IT stocks snapped a three-day losing streak as Coforge and Persistent Systems rose up to 2.5%, with the Nifty IT index climbing over 1% despite remaining down for the week.
Indian IT stocks recovered on Wednesday, August 19, after three sessions of declines, with Coforge and Persistent Systems among the top gainers. The recovery came despite weak global market cues and continued pressure on technology stocks across Asian markets.
Coforge shares gained as much as 2.47%, while Persistent Systems rose 2.18% during the session. HCL Technologies, Oracle Financial Services Software and Infosys also traded higher, gaining 1.54%, 1.34% and 1.09%, respectively.
Wipro advanced 0.66%, while Mphasis and Tech Mahindra were up 0.41% and 0.23%. TCS remained largely unchanged.
The gains pushed the Nifty IT index 1.47% higher to an intraday high of 30,659.80. The index had closed at 30,213.15 in the previous session and has fallen 3.4% over the last five trading sessions.
Midcap IT Stocks Gain As Sector Outlook Comes Into Focus
The stronger performance of Coforge and Persistent Systems came after CLSA maintained a High Conviction Outperform rating on both stocks. The brokerage sees select mid-tier IT companies as better placed to benefit from the changes underway across the technology industry.
CLSA, however, took a more cautious view on several large IT companies. It downgraded TCS, Infosys and Tech Mahindra to Hold from Outperform, while Wipro and Mphasis were cut to Underperform.
The contrasting calls come after a mixed first-quarter earnings season for Indian IT companies and global technology and systems integration companies.
Market Commentary
Analysts at CLSA said the June quarter earnings season was mixed for Indian IT services companies when compared with their global technology and systems integration peers. The sector is now going through a broader technology transition that could create both winners and losers, depending on how companies adapt and execute.
Mid-tier IT vendors are seen as being in a relatively better position to benefit from these changes, supported by management quality and execution capabilities.
AI-led revenue volumes are expected to eventually offset the pricing pressure faced by traditional IT services. Some estimates suggest this could happen by FY30, potentially taking dollar revenue growth into the low-to-mid single digits.
However, the shift is expected to take time. The longer gestation period for AI-led growth, along with limited near-term upside in some IT stocks, continues to keep sentiment towards the sector cautious.
For now, Wednesday's gains mark a recovery after three consecutive sessions of selling, rather than a broad turnaround for the IT sector. The Nifty IT index remains down 3.4% over the past five sessions.
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Rochelle Britto is a business journalist with 8+ years of experience in financial journalism. She covers equity markets, corporate earnings, IPOs, commodities and the economy.
As a reporter with leading business publications, she has tracked financial markets and covered sectors including banking and financial services, retail, consumer goods, advertising and e-commerce.
Outside work, she enjoys travelling, discovering local cultures and spending time in nature.
