Sensex hits a new high of 72,568, Nifty surges 247 points

A 19 per cent surge in the country’s net direct tax collection also supported domestic equities to make new highs on Friday, said Siddhartha Khemka, Head – Retail Research, Motilal Oswal Financial Services Ltd

“Indian markets soared to new heights in a powerful rally, driven by IT heavyweights. Green shoots of recovery in the IT sector on the back of an improved outlook for BFSI in FY25 positively influenced market sentiments,” said Vinod Nair, Head of Research, Geojit Financial Services.

The buying momentum in IT stocks was driven by decent results posted by TCS and Infosys in the quarter ended December 20223.

Analyst expects Q3 FY24 to be the bottom for the earnings downgrade cycle for the IT sector.

The country’s largest IT services company, TCS, reported a 1.95 per cent increase in net profit to Rs 11,058 crore for the third quarter (Q3) ended December 2023 as against Rs 10,846 crore in the same period a year ago. Its revenue grew 4 per cent to Rs 60,583 crore, as against Rs 58,229 crore in the same period of the previous fiscal.

“We are seeing strong deal momentum across markets resulting in a solid order book providing visibility into our long-term growth,” said K Krithivasan, Chief Executive Officer and Managing Director, TCS.

Infosys Ltd posted a 7.3 per cent decline in consolidated net profit at Rs 6,106 crore in Q3 FY24 as against Rs 6,586 crore during the same period a year ago. The company revised its revenue growth guidance for the ongoing financial year to 1.5-2 pc from 1-2.5 per cent estimated earlier.

Nuvama Institutional Equities said it sees Q3FY24 to be the bottom for the earnings downgrade cycle for Infosys and the sector.

“We have stayed positive on the sector through the year, and expect the strong deal wins of the last few quarters to gradually convert into revenue in coming quarters, even as the US macro becomes favourable,” it said in a note.

According to Kunal Shah, senior technical and derivative analyst, LKP Securities, the Nifty index exhibited significant strength, securing a notable breakout on the daily chart as it surpassed the key resistance level of 21,800.

This bullish move positions the index for potential short-term targets of 22,000 and 22,200, he said.

Nifty IT index gained 5.14 per cent with TCS rising 3.92 per cent to end at Rs 3,881.9 apiece and Infosys gaining 8.08 per cent to close at Rs 1,615 apiece. Tech Mahindra Ltd rose 4.69 per cent, and LTIMindtree Ltd gained 4.63 per cent and Wipro jumped 3.97 per cent on the NSE.