Midcap IT shares in demand

RS Software, Polaris, Hexaware, KPIT Tech, NIIT Tech, Nucleus Software, Geometric and Mastek are up 5-13% on BSE.

Shares of midcap information technology (IT) companies are in demand and trading higher by up to 15% in morning deals on the bourses.

R S Software, Polaris Financial Technology, Hexaware Technologies, KPIT Technologies, NIIT Technologies, Nucleus Software Exports, Geometric, Infinite Computer Solutions (India) and Mastek are up 5-15% on BSE. The benchmark S&P BSE Sensex was up 0.80% at 26,843 points at 1025 hours.

Mastek has rallied 6% to Rs 337, which is also its fresh 52-week week high on BSE. In past four trading sessions, shares of IT software products maker has rallied 43% from Rs 235 on September 12, after the company announced the demerger of its insurance products and services business into a new company called Majesco.

Under the demerger scheme, Mastek shareholders will get one equity share of Majesco for every equity share held in Mastek. The new entity, Majesco, is proposed to be listed on the BSE and NSE.

Polaris Financial Technology has surged 13% to Rs 262 on back of two-fold jump in trading volumes. A combined 3.35 million shares changed hands on the counter so far on NSE and BSE.

Harit Shah, analyst at Karvy Stock Broking, has positive views on the Indian IT sector given strong business growth likely over the next 2-3 years.

“In our view, the biggest determinant of valuation multiples for IT stocks is US dollar revenue growth which we expect will be robust aided by strong discretionary spending in the key US market, burgeoning trends like cloud technologies, and increasing outsourcing from Europe, the second-largest market led by cost cutting imperatives,” analyst said in a report.

“With the Indian rupee not showing volatile movements, currency risk is not a concern at this point. We expect consistent expansion into newer services and markets, along with continued value proposition of Indian IT off-shoring to drive revenue growth for the sector,” he adds.

Among  other individual stocks, R S Software has surged 15% to Rs 737 on BSE. Nucleus Software Exports soared 9% to Rs 255, followed by Infinite Computer Solutions (7% at Rs 184), Hexaware Technologies and NIIT Technologies (6% each at Rs 185 and Rs 402 respectively), KPIT Technologies and Geometric (5% each at Rs 166 and Rs 150 respectively).