With last quarter’s higher-than-expected sales surprising investors and improving the outlook for the industry, shares of Indian software giants got off to a roaring start in the new year. The four major software companies have added roughly $22 billion in market value in just two trading sessions since Thursday, when the earnings season began, led by industry heavyweights Tata Consultancy Services Ltd and Infosys Ltd, as per the Bloomberg report.
The report said that the optimism has increased due to a possible revenue rebound and a reduction in concerns about the global macroeconomic environment.
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With the unexpected revenue beat prompting rating upgrades from some brokerages, Wipro Ltd. shares saw a 14% intraday surge on Monday, their largest since July 2020, before paring gains. The company’s prediction of better revenue growth propelled HCL Technologies Ltd. to a new all-time high.
Also Read: TCS vs Infosys vs Wipro vs HCL Tech: Which stock to buy after Q3 results 2024?
As per Bloomberg report, research head at Religare Broking Ltd, Siddarth Bhamre stated, “Management commentary is reflecting a change in sentiment.” He continued, “Companies like Infosys, which have been fairly conservative in their commentary up to this point, are now expressing optimism.”
Global companies are still moving forward with initiatives, especially those targeted at cutting costs and increasing efficiencies, even though their discretionary spending on technology projects hasn’t shown any indications of picking up or going back to previous levels.
As the need for these services increases, Indian businesses are also trying to showcase their artificial intelligence capabilities. According to the news report, Infosys CEO Salil Parekh stated during a Thursday earnings call that “almost every discussion with clients involves some element of generative AI.”
Earnings upgrades at large IT companies also reflect the improving sentiment. At least six brokerages upgraded Infosys after its results last week, while analysts at JPMorgan Chase and Co upgraded their ratings on Wipro’s US- and India-listed shares.
Also Read: Wipro share price jumps 13% to 52-week high post Q3 results; Nifty IT up 2.5%
“I don’t believe there will be any more downgrades to the estimates,” Karan Uppal, an analyst at Phillipcapital, stated. He anticipates that in the upcoming fiscal year, which begins in April, the companies’ earnings will begin to rise, said Bloomberg in its report.
Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.
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Published: 15 Jan 2024, 04:11 PM IST