IT Indexes Hit New High; Six Tech Stocks Hit New 52-Week High; TCS, Tech Mahindra, Wipro Among Them

IT stocks were drummed up by bulls on Thursday as tech giants like Tata Consultancy Services (TCS), Wipro, LTIMindtree, L&T Technology Services and Tech Mahindra touched new 52-week highs. Peers like Infosys traded near its 7-month high, while HCL Tech witnessed buying as well. Nifty IT and BSE IT indexes have also clocked a new all-time high. Traders positioned in these stocks as the focus will now be on the second quarterly earnings of FY24, which will begin in early-October. Also, the uplifted mood can be attributed to deal wins by some of these biggies in recent times.

On Thursday, Nifty IT touched a new 52-week high of 33,114.15, while the BSE IT index clocked a 1-year high of 33,413.86. The majority of the IT stocks traded in the green.

Largest IT firm in India in terms of market share, TCS touched a new 52-week high of Rs 3,597.70 apiece on NSE, while Wipro and Tech Mahindra hit 1-year highs of Rs 443.25 and Rs 1,289.35 respectively. Also, L&T twins LTTS and LTIMindtree recorded new 1-year highs of Rs 4,762.35 and Rs 5,593.40 respectively.

Also, Infosys and HCL Tech surged by around 1% each.

In its research note on September 14, JM Financial's long ratio for TCS and short ratio for HCL Tech share price. It highlighted that in the last two years, TCS has moved down by around 8.5%, while HCL Tech has increased by around 1% --- resulting in a negative normalised return spread of around 9.5% between the two.

Earlier, the TCS and HCL Tech pair showed convergence at the spread of around -9.5% to -8% on multiple occasions. Adding JM Financial said that in the current scenario, the pair has reached a low at -12.3% and has started converging in favour of TCS.

On a two years data window, JM's note said that the normalized return spread is trading at 1.9 standard deviations below the mean levels of 0%. It is currently at its 3.4 percentile. Hence, on a month basis, HCL Tech moved up by 9% while TCS is up by 3%, suggesting a possible convergence in favour of TCS.

Since the start of September month, tech biggies like Infosys, Wipro, TCS, and HCL Tech have signed big deals.

On September 13, Wipro announced the launch of its Cyber Defense Center (CDC) in Dusseldorf, Germany. Wipro's CDCs are positioned around the globe to provide localised support, as well as fulfil
customers' cybersecurity and compliance requirements.

Meanwhile, on September 12, TCS partnered with Dassault Systems through its Living Heart Project unites an ecosystem of cardiovascular researchers, educators, medical device developers, and regulatory agencies including the US FDA.

Also, on the same day, Infosys announced a strategic multi-year collaboration with STARK Group, Europe's largest retailer and distributor of building materials, to power its digital transformation journey leveraging the recently launched Infosys Topaz, an AI-first set of services, solutions and platforms using generative AI technologies.

Earlier, on September 7, HCL Tech signed a multiyear Managed Public Cloud Services agreement with German technology and high-tech industry giant Siemens AG to modernize its IT landscape worldwide and power cloud-led digital transformation.

IT companies are yet to announce the dates of their Q3 numbers.

Earlier, in a research report dated September 5, Emkay said, "Our analyses of 22 global technology companies' recent quarter performance and management commentary suggest stability in demand rather than optimism. Macro uncertainties and an elongated sales cycle continue to weigh on demand and growth visibility. A majority of the companies have resisted predicting the recovery timeline, with the occurrence of recession being an irritant in any normalization. On the flip side, for the longer term, all companies remain optimistic, with technology becoming a key enabler in the enterprises' digital transformation journey. Enthusiasm surrounding technology has been further fueled by the advancement of AI, a theme that was highlighted by companies across the spectrum. AI is predicted to transform the way enterprises operate, unlocking tremendous business value."

Further, Emkay said, "Tech companies are gearing up to enable this transformation, even as the adoption remains in a
nascent stage, and complete transition remains at least a few years away. Nifty IT Index outperformed broader markets by ~6%/~5% in the last 1M/3M."

Year-to-date, the Nifty IT index surged by 1,875.30 points or 10.27, while the BSE IT index has zoomed by 4,619.82 points or 16.04%.

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