Indian stock markets on Monday edged higher after IT stocks rebounded sharply. The BSE IT benchmark closed 2.83 per cent higher as against a 0.67 per cent rise in the broader Sensex, which closed at 21,205.
Among IT stocks, TCS led the charge, rising 5.66 per cent. In the process, the stock almost recouped its entire loss suffered on Friday. India's biggest outsourcer had witnessed its biggest fall in over 18 months on Friday.
Some analysts had attributed the fall (on Friday) to a miss in sequential revenue growth - the first miss for TCS in nearly two years. India's biggest outsourcer had reported December quarter earnings on Thursday. Other analysts said TCS' valuations were stretched, giving rival Infosys an edge.
However, Monday's rebound is a signal that TCS continues to be a preferred bet in the IT space for now, analysts said. TCS shares ended at Rs 2,338.20, near the day's high of Rs 2,350. In contrast, Infosys closed 0.52 per cent higher at Rs 3,748.30.
Hitesh Shah of IDFC told NDTV that TCS' Q3 revenue growth missed estimates because of the weakness in the domestic business, which is likely to be slow for the next 2-3 quarters because of elections in India.
"One should not read too much into it. We were not negative on TCS on Friday. IT stocks are set for 25-30 per cent return for this calendar year," he added. (Watch the full interview)
Mr Shah said TCS is likely to end the current fiscal 2013-14 with 16 per cent dollar revenue growth and may grow at 17-18 per cent in the next fiscal.
The other major IT gainer today was Wipro, which reported Q3 earnings after market hours on Friday. Wipro shares hit their 52-week high, rising over 4 per cent to Rs 577.75. The stock closed 3.7 per cent higher at Rs 573.
IDFC, which has an "outperform" call on the stock, told NDTV that Wipro's growth (dollar revenue) is likely to accelerate to 11-12 per cent from 6-7 per cent this year.
"The way Wipro has won deals, they should see acceleration next year and that is what markets have started factoring in now," Mr Shah said.
HCL Tech, which had beat Street estimates last week, closed 3.7 per cent higher at Rs 1,430.60.
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