Stock Market: Sectoral rotation reveals IT green shoots

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Tech Mahindra leads IT rally in the stock market

By S Jha

New Delhi, April 28: The global equity market continues to gain strength. Dow Jones closed on Friday with gains of an almost half a percentage point. But the strength was more on the tech-bourse NASDAQ, which vaulted by over two per cent.

The green closing in the US equity markets may possibly act a trigger for the Indian indices on Monday to resume an upward journey. On Friday, the Indian bourses had gone on a free fall, tracking a weak GDP growth of the US economy.

Nifty shed over 200 points from the day’s high on Friday. Bank Nifty also dived over 325 points from the day’s high.

There are signs of sectoral rotation on the street. The metal pack is trending higher. Tata Steel, Hindalco, and JSW Steel are leading the charge of the metal pack on the street.

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The banking space is also buzzing. While Kotak Mahindra cracked down on the back of the Reserve Bank of India censure on its credit card business, the likes of the SBI, Axis Bank, ICICI bank, and others are gaining steam.

But there are signs of the IT firms finally gaining space in the bullish equity markets. Barring a few small cap and mid cap IT firms, the sector has been one of the worst performers in the last one year.

Tech Mahindra vaulted by over 13 per cent during the day. But it later gave to profit booking to settle down with gains of 7.5 per cent.

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In one-year frame, Tech Mahindra has given a return of just 25 per cent. It remains way below the level of ₹1790, which was seen on December 31, 2021. The IT giant is in league with large cap peers such as Infosys which have been laggard for the past one year on the street.

But several of the IT firms were trending up in the Friday’s session. The likes of Cigniti Technology, Oracle Financials, KPI Tech, Zensar Technology, Birla Soft, Nucleus Software, and many more were trending up in the Friday’s session.

There are indications that the sectoral shift by the fund buyers may find value buying interests in the IT firms. This is amid the transformer-based firms witnessing profit booking amid record gains in a short span of time on the bourses.

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Over two percentage gains by NASDAQ may bring cheers among the IT bulls. They traditionally draw cues from NASDAQ to trade the stocks of the IT companies in the Indian bourses.

(Disclaimer: This article makes no recommendations for buy or sell of shares of any company)