After Accenture’s better-than-expected results announcement, market experts are expecting a big rally in Indian IT stocks. They said that shares of Indian IT companies listed on the NYSE saw strong buying post-Accenture results, which also hints at a big gap-up opening for Indian IT stocks when they reopen on Monday. Infosys share price finished close to 6%, whereas Wipro shares ended over 6% at the NYSE after Accenture’s results were announced on Wednesday.
According to stock market experts, Indian IT companies receive more than 50% of their average business from the US, with Accenture playing a major role. After the better-than-expected Accenture results, the market expects similar Q2 results from the Indian IT giants. As the market has a track record of discounting events well before they take place, we can expect strong buying in Indian IT stocks on Monday.
What does the US market hint at?
Avinash Gorakshkar, Founder of Avinash Mentor Research, said, “After the strong Accenture results, Indian IT stocks witnessed strong buying in the US stock market. Shares of Infosys and Wipro skyrocketed after the Accenture results, which is expected to fuel the positive sentiments about the Indian IT stocks of Dalal Street bulls.
Gorakshkar said that IT stocks have around 10% weightage in the Nifty 50 index and around 12% in the BSE Sensex, which may also fuel these key benchmark indices when trading resumes on Monday.
Why Accenture results hold the key?
On why Accenture results hold the key for the Indian IT companies, Mahesh M Ojha, VP — Research & Business Development at KC Securities, said, “Indian IT companies draw more than 50% of their business from the US. Accenture plays a big role in it. Some Indian IT companies draw more than 50% of their business from the US. So, we are bullish on IT stocks when trade resumes on Monday.”
IT stocks to buy on Monday
On IT stocks to buy on Monday, Mahesh M Ojha of KC Securities said, “Sagility, Birlasoft, Mphasis, Persistent Systems, and LTIMindtree shares are expected to outperform other Indian IT stocks when the market opens on Monday.”
However, both experts maintained that the rally in the IT stocks may fizzle out soon. They advised investors to book a profit rather than hold the position for the long term. They advised IT shareholders to book profit after more than 5% rally in their positions on an intraday basis.
Accenture results
Accenture reported better-than-expected fiscal fourth-quarter performance and an upbeat outlook. The US IT giant reported fourth-quarter GAAP earnings of $3.29 per share, beating analysts’ estimates by 11 cents. Revenue rose 6.3% year over year to $18.7 billion, exceeding expectations by about $660 million.
Consulting revenue totalled $9.28 billion in the fourth quarter, above analysts’ expectations, while revenue from its communications, media and technology segment jumped 11% to $3.26 billion during the quarter, the Dublin-headquartered firm said in a statement on Thursday.
Fourth-quarter bookings increased 4% year over year to $22.2 billion, pointing to resilient client spending on IT projects.
Disclaimer: This story is for educational and informational purposes only. The views and recommendations above are those of individual analysts or broking companies, not Mint. We advise investors to check with certified financial experts before making any investment decisions.
