Why Infy, Wipro, HCL Tech and TCS stocks have hit 52-week highs?

Business

oi-Sunil

By Sunil Fernandes

Published: Friday, August 16, 2013, 8:33 [IST]

When the markets around them are crumbling and blue chip stocks are hitting 52-week lows, TCS, Wipro, HCL Tech, Infosys and Tech Mahindra have hit 52-week highs.Close on the heels of Tata Consultancy Services and HCL Tech touching their 52-week high earlier this month, Wipro, Tech Mahindra and Infosys touched 52-week highs on the National Stock Exchange on Wednesday.

Tech Mahindra touched a 52-week high of Rs 1346, while Wipro hit a 52-week high of Rs 472.90 and Infosys hit Rs 3094.

Tata Consultancy hit a lifetime high of Rs 1890 earlier this month.

The reasons for these stocks touching 52-week highs are plenty. First, the results of most of these companies and the forward guidance have been spectacular. It all began with Infosys which reported numbers last month. Not only were the Q1 numbers above street estimates, the company did not change its dollar revenue guidance, which was a major positive. HCL and TCS' results were outstanding, while Wipro's results for the 1st quarter and forward guidance were encouraging.

Analysts opine that there are a lot of things in favour of the IT sector. The first is that the rupee keeps scaling new lows, which tends to improve margins for software companies. The second is that the US economy, which is a major market for Indian IT companies is seeing a robust recovery.

Thirdly, the banking, infra, metal, real estate, power and other sectors of the economy are weak and stocks from the sector have been hammered. As investors have very little opportunities in other sectors, they are selling and investing in technology stocks and pharma, which has seen these stocks scaling 52-week highs.

Analysts argue that as longer as other sectors of the economy remain weak, investors would continue preferring IT stocks and their shares could grind higher.

The only dark cloud for the sector remains the Immigration Bill in the US, which, if passed in current form, could be a major problem for the Indian IT sector.

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