IT shares gain; TCS hits new high, crosses Rs 3,000 mark

Shares of information technology (IT) companies were continue at their upward movement with the sector giant Tata Consultancy Services (TCS) hit a new high crossing Rs 3,000 mark on BSE.

Besides TCS, Persistent Systems, Mindtree, Take Solutions, Tata Elxsi, Zensar Technologies, NIIT Technologies, Tech Mahindra and MphasiS were up in the range of 1% to 6% on BSE on Monday.

The S&P BSE IT index hit a new high of 12,353, up nearly 1% in intra-day trade. Nifty IT index too hit a fresh high of 12,728, surpassed its previous high of 12,668 on the National Stock Exchange (NSE) in intra-day deal today.

In past three months, Nifty IT index has rallied 13% as compared to 7.5% rise in the Nifty 50 index. In past one month, the IT index was up 7.4% against 3.8% gain in the benchmark index.

The midcap IT stocks like Mindtree, Persistent Systems, Sonata Software, KPIT Technologies and NIIT Technologies were up 15% to 26% during past one month.

TCS hit a new high of Rs 3,020, up 2%, gaining 14% in past one month.

The market capitalisation of the IT major touched a record high of Rs 5.76 trillion. The stock today turned ex-interim dividend for Rs 7 per share.

According to analysts at JP Morgan IT services spending is likely to cyclically firm up/strengthen in 2018. Except for telecommunications and some parts of traditional US retail, we sense growing client confidence across industries spanning BFSI (banking, financial services and insurance), manufacturing, consumer goods, logistics and utilities – even in energy with rising oil prices likely to spur capex in this sector.

For India IT to benefit more solidly and sustainably from rising spending in new areas beyond the anticipated cyclical pick-up in FY19, the industrialization of digital theme (of digital projects getting consistently larger to incorporate fuller system integration programs) must hit an inflection point, in our view. Moderate valuations, prospects of gently greater growth (say, 2-3% points higher in FY19) in the wake of synchronized stronger global growth coupled with potential INR depreciation may well see India IT become a counter-consensus sector pick for 2018, the foreign brokerage said in latest report.

TATA Consultancy Services ( TCS )