The shares of IT stocks jumped in trade on November 10, pushing the Nifty IT index up nearly 2 percent to emerge as the top sectoral gainer on the market today. The index has now snapped a six-session losing streak.
The Nifty IT index stood at 35,760.60, as seen at 1.30 pm as investors resorted to value-buying after sharp correction during the losing streak. The investor sentiment was further boosted by hopes for a nearing end to the ongoing US government shutdown.
Value-buying:
The Nifty IT index dropped nearly 2.7 percent while recording sharp losses from October 30 to November 7. This came after the index surged more than 7 percent earlier in October as better-than-expected Q2 results and positive outlook for the second half of the ongoing financial year boosted investor sentiment.
This came despite delays to US-India trade deal negotiations
Hopes of nearing end to US government shutdown:
The US Senate on November 9 moved ahead with a measure aimed at reopening the federal government and ending a now 40-day-long shutdown. In a procedural vote, senators advanced a House-passed bill that will be amended to fund the government until January 30 and include a package of three full-year appropriations bills.
If the Senate passed the amended measure, it will be sent for approval by the House of Representatives and then to President Donald Trump for his signature. “It looks like we’re getting very close to the shutdown ending,” Trump told reporters at the White House.
As part of the shutdown, many government services have been suspended and hundreds of thousands of federal employees have been ordered not to work.
"A possible end to the longest running U.S. shutdown is a positive for markets. Our expectation is that the next step is for a House vote on Wednesday, with the government set to re-open this Friday," said Prashant Newnaha, senior Asia-Pacific rates strategist at TD Securities.
Indian IT companies derive a major portion of their revenue from the US market. The potential end to the US shutdown in America may have boosted investor confidence for these stocks.
Jefferies in September chose TCS and Infosys as its top picks about the largecap IT stocks. It noted that both are “well placed” to deal with the $100K visa fell for the Indian IT sector.
Among the midcap stocks, Jefferies prefers Coforge.
Top IT gainers today:
Infosys shares were the top gainer on the Nifty IT index, rising nearly 3 percent to trade at Rs 1,519.70 apiece. HCL Tech, LTI Mindtree, Wipro and Mphasis shares meanwhile gained nearly 2 percent each.
Persistent Systems, Tata Consultancy Services (TCS), Coforge and Tech Mahindra shares rose over 1 percent each.
Also read: Our LIVE blog on stock market updates
(With inputs from Reuters)
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