Persistent, Coforge to HCL Tech: Why are IT stocks skyrocketing?

  • The Nifty IT index gained around 2.50% on Wednesday despite high volatility on Dalal Street

Asit Manohar
Updated5 Jun 2024, 02:54 PM IST
Stock market today: Leading IT majors Persistent Systems, Coforge, MPhasis, HCL Technologies, and Wipro have witnessed sharp upside movement since early morning deals.
Stock market today: Leading IT majors Persistent Systems, Coforge, MPhasis, HCL Technologies, and Wipro have witnessed sharp upside movement since early morning deals.

Despite high volatility in the Indian stock market, leading IT stocks are witnessing sharp upside movement during Wednesday deals. The Nifty IT index, a benchmark index for the IT sector on the National Stock Exchange of India, has risen to 2.50 percent, while it was one of the least affected segments during a stock market crash on Tuesday. Leading IT majors Persistent Systems, Coforge, MPhasis, HCL Technologies, and Wipro have witnessed sharp upside movement since early morning deals. Among top gainers among the Nifty IT pack, Persistent System shares are up by around 6.50 percent, MPhasis shares are up by over 4 percent while Cofgorge and HCL Tech shares have risen over 3 percent.

Insights from stock market experts reveal a strategic shift in the current volatile market. They suggest that the market's heavy fall, triggered by political instability concerns after the Lok Sabha Election results, has prompted investors to make calculated moves. These investors are wisely shifting their investments from the overbought segments to the discounted segments, thereby mitigating potential losses if the market further declines.

Also Read: Banking may outperform; Nifty could reach 23,500 by December end, says Trivesh D of Tradejini

Triggers for IT stocks

Speaking on the reason for the rise in IT stocks amid volatility on Dalal Street, Saurabh Jain, Vice President — Research at SMC Global Securities, said, "Amid volatility in the market, investors are moving their money from overbought segments to discounted segment, and hence we are witnessing upside in safe segments like IT, FMCG, auto, and pharma segment. As IT stocks have remained under the sell-off stress for more than a year, investors are moving their money into IT pack as the downside in these stocks are limited compared to PSU, banking, defence, and metal segments." The 'sectoral shift' refers to the movement of investments from one sector to another, and in this case, it is the shift towards the IT sector that is fueling the rise in IT stocks.

Safe haven bet

During times of market turmoil, certain sectors act as safe havens, providing a sense of security to investors. Avinash Gorakshkar, Head of Research at Profitmart Securities, explains, “We often see a surge in investments in FMCG, pharma, IT, and healthcare segments when the Indian stock market experiences a sharp fall. This was evident after the disappointing Lok Sabha Election results, when bulls strategically shifted to these safe havens on Dalal Street. This move resulted in the Nifty FMCG Index being the only Index that ended higher on Tuesday, while the Nifty Pharma, Nifty Healthcare, and Nifty IT were the least affected indexes in the previous session.”

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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News in Numbers

Numbers that help you understand news better
$5 M

394,000

$112 B

12.1%

₹133.50 Cr

₹12,300 Cr

$136 M

First Published:5 Jun 2024, 02:54 PM IST
HomeMarketsStock MarketsPersistent, Coforge to HCL Tech: Why are IT stocks skyrocketing?

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