Tech stocks went on a rally on January 9 with strong buying ahead of the IT giants Infosys Tata Consultancy Services declaring their December quarter earnings later in the week and hopes of rate reversal by major central banks.
Both the tech giants are scheduled to announce their financials for the third quarter of FY24 on January 11, kicking off the earnings season. A strong bullish undertone in the market has prompted investors to bet on an improvement in macro fundamentals at the end of the rate-tightening cycle.
"Despite industry challenges, there is optimism in the sector, which is driven in anticipation of the end of the rate-tightening cycle. This is expected to accelerate the resumption of delayed projects," said Vinod TP, research analyst at Geojit Financial Services.
Most tech stocks stayed off the 2023 bull run in the market and it caused their valuations to remain reasonable. This has attracted investors in hordes.
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At 11.25am, shares of L&T Technology Services, Infosys, HCLTech, Wipro, TCS, and Tech Mahindra were up 1-2 percent on the NSE, which lifted the Nifty IT index over 1 percent.
Analysts, however, expect a muted quarter for the IT sector in the December quarter because of prolonged high inflation, delays in discretionary projects, and a generally sluggish growth trend. Moreover, the October-December period is traditionally a slow quarter for tech firms, mainly because of the holiday season in the US and Europe, which represent the largest market for Indian IT companies.
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