IT shares in demand; Infosys up 3%

Infosys,TCS, MindTree, HCL Tech and Wipro from the S&P BSE IT index are up 1-3%.

Shares of information technology (IT) companies are in demand and trading higher by up to 10% in otherwise subdued market on expectation of strong revenue growth during the recently (April-June) concluded quarter.

Infosys, Tata Consultancy Services (TCS), MindTree, HCL Technologies and Wipro from the frontline IT stocks are up 1-3%, while R S Software, eClerx Services, Mastek, Zensar Technologies and Polaris Financial Technology have gained between 5-10% on the Bombay Stock Exchange (BSE).

S&P BSE IT index, the largest gainer among sectoral indices, is up nearly 2.2% or 187 points at 9,516 compared to 0.32% rise in S&P BSE Sensex at 1340 hours.

Since June 26, the IT index has surged 5% after the Accenture reported a better-than-expected 7.5% rise in quarterly net revenue, led by a rebound in demand for its consulting services, where it competes with Indian IT companies. The benchmark index has gained 4% during the same period.

Mohit Jain and Princy Bhansali, analysts at Anand Rathi Research expect a better revenue growth for IT companies primarily driven by seasonal acceleration.

Cross-currency movements are likely to boost revenue growth by 40-60bp quarter-on-quarter (QoQ) across the top-tier, but unlikely to offset margin headwinds meaningfully, Ashish Chopra and Siddharth Vora, analysts at Motilal Oswal, said in a recent research report.

Infosys, up 3% at Rs 3,336 on BSE, is schedule to announce its Q1 results on July 11, 2014.

"We expect 3.1% qoq growth for Infosys in terms of US$ revenue growth, assuming little spillover from 4QFY14 and some benefit from deals secured in the recent past”, says analysts at Anand Rathi Research.