InvestorQ : Why are the IT companies in India like Infosys and HCL Tech rallying so sharply even on a weak trading day?
swati Bakhda made post

Why are the IT companies in India like Infosys and HCL Tech rallying so sharply even on a weak trading day?

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Sam Eswaran answered.
5 months ago
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Even as the markets have remained volatile due to the global risk factors, the stocks of information technologies companies saw robust demand as in the midst of a market crash, the Nifty IT index gained 1%. The trigger came after global IT and consulting giant, Accenture, reported solid numbers for the November quarter. In addition, Accenture also provided an extremely strong FY22 outlook and earning guidance.

While Infosys may have been the top gainer on the Nifty followed by HCL Tech, the bullishness was evident across the spectrum of IT stocks. So, you had Infosys, Wipro, HCL Technologies, Mindtree, Tech Mahindra, LTI and TCS appreciating in value anywhere between 1% and 3%. Most of the non-index stocks in the IT space also gained anywhere between 2% and 5% on Friday.

Let us have a quick peak at the Accenture numbers. The company reported strong revenues in the Nov-21 quarter and gave the added bonus of upgrading its annual guidance by 700 basis points or 7%. Accenture has been a big beneficiary from the global Cloud transformation trend. Accenture also hinted at record high bookings and an extremely outlook for the IT sector overall.

If you look at the two verticals of Accenture comprising of outsourcing and Consulting, the growth was evident in both verticals. Outsourcing revenues were up 21% yoy at $6.57 billion while the overall revenue including consulting was up a whopping 27% at $14.97 billion. More importantly the revenue guidance has been enhanced from the range of 12-15% to the range of 19-22%, representing a quantum leap. Margin guidance was stable.

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