Analyst Call Tracker April 2024: Optimism eludes IT stocks despite upgrades, auto stocks see rating cuts

Among the companies garnering maximum optimism from brokerage firms, ICICI Bank Ltd leads the pack with an overwhelming buy rating.

As the general elections progress, the markets seem to have cooled off to a more realistic scenario, from the exuberance of over 400 Lok Sabha seats for Prime Minister Narendra Modi’s NDA government.

Moreover, India Inc’s Q4 earnings, which have been mostly in line with Street estimates, have not been able to provide a meaningful positive trigger to the indices to rally further at these high valuations.

Banking and financial services stocks continued to dominate the list of top 10 stocks with maximum optimism. Analysts remain hopeful of strong credit growth on account of clean and well-capitalised balance sheets.

Also Read: What drove the biggest downgrades and upgrades this year

On the other hand, while some IT stocks saw sharp brokerage upgrades, indicating a positive outlook, concerns linger as they still find themselves among the list of stocks with maximum pessimism.

Automobile stocks are among those that have received maximum brokerage downgrades in April. Auto companies have announced strong Q4 results, but those were in line with expectations. Since the automobile stocks have rallied a lot recently, analysts are worried if there is enough upside in these stocks. They are also concerned if the strong demand momentum will continue or not.

Optimism prevails in banking, finance stocks

Among the companies garnering maximum optimism from brokerage firms, ICICI Bank Ltd leads the pack with an overwhelming buy rating, supported by a minimal number of hold and sell calls. Following closely behind are ITC Ltd, SBI Life Insurance Co Ltd, and HDFC Bank Ltd, showcasing robust confidence from analysts.

Also Read: Volatility rising much ahead of elections over the years; what it means

However, it's not just the banking and financial sector enjoying the limelight. Companies across sectors such as ports and logistics, healthcare, and energy also feature prominently on the optimism scale, including Adani Ports & Special Economic Zone Ltd, Apollo Hospitals Enterprise Ltd and NTPC Ltd.

Pessimism lurks in IT stocks

On the other hand, IT firm Wipro emerged as the company with the highest pessimism score, due to a significant number of sell calls outweighing buy recommendations by a considerable margin. Other notable names in this category include Divi's Laboratories Ltd, Asian Paints Ltd, and Nestle India Ltd, reflecting concerns or uncertainties surrounding their performance.

Shifting sentiment towards recent IT laggards

Tech Mahindra Ltd stands out as the company with the most significant upgrades, with a substantial increase in buy recommendations and a corresponding decrease in sell calls, reflecting a surge in confidence among analysts. Conversely, Grasim Industries Ltd faces the brunt of downgrades, with a notable decrease in buy ratings, hinting at underlying concerns among analysts.

Tech sector

Tech Mahindra, a prominent player in the IT space, garnered attention with the highest number of brokerage analyst upgrades among Nifty 50 stocks in the past month. The company's unveiling of a strategic vision for a business turnaround over the next three years fuelled bullish sentiments. Despite this, analysts remain wary of uncertainties in demand that could impact revenue growth momentum in the near term.

Among other IT giants, TCS saw a slight uptick in buy recommendations, while HCL Tech maintained a steady course with a balanced mix of buy, hold and sell calls.

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