LTI Mindtree, TechM surge 2% as IT index rallies on a rangebound day: What's pushing IT higher
Shares of IT companies sharply ended higher on April 29, sharply off lows on hopes of easing trade tensions between US and China, and broadly upbeat earnings commentary by leading companies.
The rise in the stock prices pushed the Nifty IT up over 1.2 percent in an overall flat market.
Motilal Oswal Financial Services in its latest note said that IT stocks have been recording gains despite seven out of the 11 companies that have reported their quarterly results so far missing out on revenue estimates.
The brokerage cited two possible reasons for the gains: 1) earnings downgrades have been milder than feared, and 2) management commentary has remained broadly positive, particularly around near-term demand stability – especially in 1QFY26.
"We, however, believe that tariff risks have not fully been absorbed, and even if the tariff problem goes away, the sector is back to the base problem of a slower growth pick-up," Motilal Oswal said.
The brokerage added that the market is also pricing in a trade war de-escalation and easing concerns over a possible US recession. "We prioritize correct positioning over predictability, favouring bottom-up transformation and margin-driven stories over top-down discretionary names," it further said.
LTI Mindtree was the top gainer on the index, rising over 2 percent to close at Rs 4,590 apiece. The stock has seen some volatility after an initial boost following its Q4 results which were released on April 23. The firm reported a 2.6 percent year-on-year rise in consolidated net profit for the fourth quarter of FY25 at Rs 1,128.5 crore.
Tech Mahindra and Persistent Systems shares followed, rising nearly 2 percent each. Heavyweights Coforge, HCL Tech and Infosys shares meanwhile gained over 1 percent each. These stocks too have seen significant volatility in recent days after releasing their respective January-March quarter results.
TCS, Mphasis and Wipro shares closed in the green with marginal gains,
US President Trump had announced a slew of reciprocal tariffs on a number of countries on April 2, which were later paused on April 9, except for China. Some analysts are still concerned about the rising possibilities of a US recession as prices in America would increase due to the tariffs.
The US-China trade tussle escalated to its peak when Trump hiked tariffs on Chinese imports to a whopping 145 percent. Both the nations have expressed the need to engage in talks and settle differences.
The Indian IT companies derive major portions of their revenue from the American market, and any easing of trade tensions between US and China is expected to boost the share prices.
Speaking about its stock picks, Motilal said, "Among Tier-I players, we prefer TechM, driven by early signs of transformation under new leadership and improving execution in BFSI. Margin expectations are now more reasonable, and niche offerings are resonating well. We believe TechM’s transformation remains relatively decoupled from discretionary spending. With further scope for telecom recovery and operational efficiency, we see room for sustained margin improvement going forward."
"We continue to like HCLT for its all-weather portfolio and believe TCS offers a decent risk-reward balance. The previous downcycle showed that mid-tier firms can thrive in cost-focused environments. Coforge’s recent deal with Sabre is a strong indicator that mid-tiers now have both the scale and the solution maturity to win cost-saving deals. Our bet is on mid-tier companies with strength in BPO, data, RPA, and GenAI acceleration—with Coforge and Persistent emerging as early winners," it added.Disclaimer: The views and investment tips expressed by experts on Moneycontrol are their own and not those of the website or its management. Moneycontrol advises users to check with certified experts before taking any investment decisions.