IT Stocks Gain Up To 4% Before Earnings Season; Nifty IT Index Up More Than 2%

The stock prices of some of the leading IT companies appreciated by up to 4% on April 8 amid expectations of results from the March quarter earnings season.

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Mphasis turned out to be the biggest riser after gaining more than 4%, while the share prices of Wipro and HCL Technologies appreciated by 3.32% and 2.74%, respectively. LTIMindtree also recorded gains during the session. Other index constituents, including Tata Consultancy Services, Infosys, Persistent Systems, and Tech Mahindra, rose up to 2.5%.

The Nifty IT index extended its rally for the fourth consecutive session and has gained 7.61% during this period. All 10 constituents of the index traded in positive territory.

Earnings Season And Deal Activity Drive Momentum

Buying interest in IT stocks was supported by expectations around upcoming quarterly results. Tata Consultancy Services is scheduled to announce its fourth-quarter results on April 9, marking the start of the earnings season for the sector.

Wipro also saw stock-specific gains after announcing a multi-year technology transformation agreement with Singapore-based Olam Group, valued at over $1 billion, according to company disclosures cited by Moneycontrol.

Currency Movement Supports IT Stocks

The Indian rupee trading near 93 against the U.S. dollar supported IT stocks, as the sector derives a significant share of revenue from overseas markets. A weaker rupee typically enhances revenue realisations for exporters.

Market Recovery Led By IT Sector

With IT stocks leading the recovery, the benchmarks were able to regain lost ground. However, the market was muted overall as only the IT segment performed relatively better.

There had been some corrections in the IT space, which was seen in the fall of the Nifty IT index at the beginning of the year. The latest rally comes on the back of that period of correction.

Performance Of The Sector And Earnings Season

Even after the latest rally, the Nifty IT index is trading well below its previous record highs. IT companies will start announcing their financial results for the quarter from April 9, with top companies like TCS, Infosys, and HCL Technologies slated to declare their financials.

The performance of IT stocks in the day is a result of heightened expectations ahead of earnings declarations and new deals, with the entire constituent index seeing gains.