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MUMBAI: Shares of information technology (IT) companies rose on Monday, bucking the trend in broader markets, with benchmark indices down over 2%.

The rise in IT stocks has been attributed to strong fiscal fourth quarter results.

At 12:40 pm, Nifty IT index was traded 1% higher at 26250.80, while the Nifty was down 2.2% at 14546.30.

India’s software services players are expected to put up their strongest performance in the past few quarters, or even years, in the fourth quarter of FY21, say analysts.

Among the Nifty IT stocks, Tata Consultancy Services (TCS) gained 1.2%, Infosys Ltd rose 1.1%, Wipro Ltd advanced 1.4% and HCL Tech surged 2.3%. On the other hand, Mindtree Ltd fell 0.7%, Oracle Financial Services was down 0.3% and Mphasis Ltd declined a tad.

Tata Consultancy will kickoff the results season on 12 April, followed by Infosys on 14 April. Analysts see growth being driven by acceleration in digital technologies, improved demand for automation, ramp-up in deal wins, and increasing migration to cloud platforms.

“We expect Tier-I companies to report growth of 2.5-3.4% quarter-on-quarter in constant currency terms — their strongest Q4 in five years. Early indicators like fresh high order bookings from peer Accenture, in its February 2021 earnings, also point to an unprecedented demand for tech services — expected to reflect in deal momentum," said analysts at Motilal Oswal Financial Services.

TCS and Infosys are expected to lead the pack of top tier-1 players in revenue growth. The street will look at Infosys for guidance and demand for FY22 and at Wipro for guidance into Q1FY22.

On similar lines, analysts at Emkay Global Financial Services expect tier-1 tech players to report sequential growth of 2.2-3.9% in Q4FY21 and 2.5-4.5% for tier-2 companies, in constant currency terms, maintaining strong revenue growth momentum from Q3FY21.

"Cloud, digital transformation, automation, AI and cybersecurity continue to see healthy demand. Margins likely to expand yoy but decline qoq due to wage hike: Margins are likely to take a hit sequentially on account of salary hikes, promotions, bonuses and strong rupee" added the Emkay Global Financial Services report.

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