The Indian stock market was seeing another volatile session on March 19, with benchmark Sensex trading 134.67 points, or 0.27 percent, down at 49081.85, and the Nifty shedding 48.40 points, or 0.33 percent, at 14509.50 around noon.
Among the sectors, the IT index gained after Accenture reported robust earnings. The IT services major registered an 8 percent growth at $12 billion for the quarter ending February 2021 and a record $16 billion in new deal wins in the quarter, up 13 percent year-on-year (YoY). The company also increased its guidance for FY21 to 6.5-8.5 percent, driven by digital. Accenture follows September to August as its fiscal year.
The strong growth momentum came on an increase in demand for digital services such as cloud on the back of COVID-19.
Accenture's second0quarter numbers clearly indicate that there is a strong demand for the sector, said Abhishek Bhandari of Macquarie Capital Securities.
“The key message from Accenture result is that the demand tailwinds are very strong for the sector mainly in cloud transformation,” he said in an interview with CNBC-TV18.
"The sector is still undergoing EPS upgrades both led by revenue as well as margin. A company like Infosys has been constantly upping the revenue guidance mainly aided by robust deal inflows that they have witnessed," said Bhandari while talking about the Indian IT sector.
Bhandari is positive on HCL Technologies and Infosys in the largecap space and Larsen & Toubro Infotech and Mphasis in the midcap IT space.
“Our top picks are Infosys and HCL Technologies in the largecap space. In Infosys, our target price is Rs 1,680. We are positive on HCL Tech because we see the software business for them turning around. In the midcaps we like Mphasis and Larsen & Toubro Infotech,” he said.
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Credit Suisse believes Accenture's strong earnings reaffirms the view of an upcycle for the Indian IT sector. It prefers Infosys, HCL Technologies and TCS in the Indian IT sector.
JP Morgan is overweight on Infosys, HCL Technologies, Tata Consultancy Services and Tech Mahindra as it believes that these companies should benefit from the upcycle.
Indian IT stock, including Tata Consultancy Services, added half a percent followed by Mphasis, HCL Tech, Coforge and Mindtree which are also trading in the green.
Research firm HSBC in its report on the IT sector said amid eight key margin push-pulls, the sector profitability is manageable in the near term.
It is of the view that absent rupee depreciation, pressures are likely to be visible from H2FY22 and then in FY23. It has "buy
calls on Infosys and HCL Technologies.
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