Most IT stocks witnessed a sharp jump in early trade on November 11, boosting their sectoral index by more than 4%.
The Nifty IT index was up 3.93% at 29,626.60 with all stocks in the green. Shares of Coforge, Infosys, Mphasis and Larsen & Toubro Infotech and Persistent Systems were up with gains of more than 4% each.
Benchmark Nifty50 was 1.59% up at 18,314.25 at that time.
The IT stocks have been under pressure of late due to concerns over a recession in the US and Europe. The Nifty IT index is 38% below its 52-week high while the Nifty is a whisker away from its 52-week high now.
In a recent report, brokerage firm ICICI Securities said that deployment in the sector should be slow and gradual as there would be unknown risks ahead that might further degrade valuations.
The brokerage firm said the macroeconomic challenges have worsened in the last three months; IMF trimmed the US GDP growth forecast and raised jobless estimates for CY22 and CY23 in its July 22 outlook, and record high energy price inflation and forex weakness persists in Europe, UK, etc.
A lot will depend now on how the US Fed reacts to the fresh inflation prints. In case of a pause in rate hikes, the concerns over a recession will ease, which may boost the Indian IT services providers.
Some experts are positive about the sector because of the inevitability of IT services in the modern world.
The IT sector is a great business and long-term investors should look at this sector as a contra bet, market veteran Ramesh Damani told CNBC-TV18.
Disclaimer: The views and recommendations given in this article are those of individual analysts and broking firms. These do not represent the views of MintGenie.