IT Sector Update - Sep 14, 2020 - Angel Broking

Mr. Jyoti Roy - DVP - Equity Strategist, Angel Broking Ltd

"The mid quarter guidance upgrade by HCL Tech led to a broad based rally in the IT sector led by HCL Tech which was up by 10.6% while Infosys and TCS were up by 2.9% and 4.85% respectively. However mid and small cap IT stocks performed better than their large cap counterparts as the new SEBI rule on multi-cap funds mandating minimum 25% investment in mid & small cap stocks coupled with the guidance upgrade by HCL Tech provided them with the much needed shot in the arm. Persistent Systems (+ 14.73%), Mphasis (+8.9%), Cyient (+7.26%) and L&T Infotech (up 6.0%) were amongst the biggest gainers in the mid & small cap IT space. HCL Tech has provided its mid quarter guidance wherein the company has highlighted that the they expect the Revenue and the Operating Margin for Q2FY2021 to be meaningfully better than the top end of the guidance that the company had provided in July 2020 and expects revenue growth to be well in excess of 3.5% QoQ in Q2FY2021. The mid quarter guidance update by HCL Tech corroborates our view that demand for It services are expected to increase significantly in the aftermath of the Covid-19 crisis due to accelerated adoption of digital technologies. We continue to maintain our positive outlook on the IT sector with HCL Tech being our top pick in the large cap space while Persistent Systems and Zensar Technologies are our top picks in the mid & small cap IT space."

Source : Equity Bulls

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