Nifty IT index has lagged behind Nifty 50 in the last year, but experts believe that the sector could witness a revival with improving macros and cost efficiency measures.
India Business News: TCS (Tata Consultancy Services) and Infosys, two of India's top software exporters, will begin the fourth quarter earnings season this month. It's expected to be a modest quarter for IT firms.
In a recent note, brokerage house Ambit Capital noted that the March quarter (Q4) outlook doesn’t suggest immediate recovery for IT. It prefers Tier-1 IT over Tier-2 IT.
Manik Taneja says Axis Capital has reduced sell ratings for most tier I and tier II companies, except for Tech Mahindra which is rated positive. The positive reaction to stock prices is driven by companies reporting in line to a beat to modest expectations. The sector has underperformed compared to benchmarks, leading to some catch-up. However, the earnings trend continues to be mixed.
Indian IT companies may see faster revenue growth starting from Q4FY24 due to a better overall economy and large deal wins, according to BNP Paribas. The firm believes Q3FY24 will be the last quarter of weakness before growth picks up.