IT stocks remain attractive at current levels, say analysts
1 min read . Updated: 16 Feb 2021, 11:57 AM IST
Premium- Tech Mahindra, Infosys, HCL Tech and Wipro are among the top picks of Kotak Institutional Equities in the sector.
After a strong run in 2020, IT stocks have underperformed the boarder markets so far this year. The Nifty IT index is up 7% year to date as compared to 10% gain in broader Nifty50 index. Many analysts still remain bullish on IT stocks , saying that the recent underperformance offer good entry opportunities.
"December 2020 quarter growth was strong led by healthy spending, an element of catch-up spending and large deal ramp-up. Strong growth along with low cost base led to significant EBIT margin outperformance and expansion. Deal pipelines are strong across companies although the conversion is uneven. Nonetheless, there are enough tailwinds in the form of lift-shift-transform deals and accelerated digital and core transformation to drive a couple of years of strong growth," Kotak Institutional Equities said in a recent note.
IT stocks are attractive, it added. Tech Mahindra, Infosys, HCL Tech and Wipro are among its top picks in the sector.
IT has still room to go up, says V K Vijayakumar, Chief Investment Strategist at Geojit Financial Services.
Today, Indian stock markets hit an all-time high, powered by gains in Reliance Industries, as optimism about a swift global economic recovery boosted investor sentiment globally. However, markets failed to hold on to early gains.
"Bull markets have an uncanny ability to climb many walls of worries. And, this bull market, in typical style, is consistently climbing many such walls. The border stress with China, the farmers' strike, inflation, crude spike...are no longer issues of concern. The bulls are focussed on growth and earnings recovery and the improving Covid incidence. FPIs feel that India has the best post-Covid rebound story," said V K Vijayakumar.
"In such a favourable setting, investors should remain invested with occasional profit-booking," he added.
The NSE Nifty 50 index was up 0.3% at 15,362 after hitting 15,430 in early trade.
"The index continued its upward momentum with yet another gap-up opening. We are steadily heading to 15500 which should be the next target and level of resistance for the Nifty. While a good support lies at 15100, traders should lock in profits at regular intervals and update stops as well. Since we are at market highs any drop or correction can make the markets volatile. Hence extreme caution should be exercised at all times," said Manish Hathiramani, proprietary index trader and technical analyst, Deen Dayal Investments.
