IT stocks: Investors should wait till clarity on growth, margin emerges

Fewer deals wins, delay in ramping up of existing deals and likely price cuts are key worries expected on the back of subdued demand, thanks to the disruption in the global economy

Stocks of IT majors, which were severely hit by weak investor sentiment after the Covid outbreak, have bounced back sharply from their March lows.

TCS, Infosys, HCL Tech, and Wipro have seen their shares gain 25-36 per cent since March 23. Tech Mahindra (TechM) has risen 13 per cent, on account of a relatively poor showing in the March quarter (Q4). With this, most of the top IT stocks are now trading above, or at par, with their respective historical 1-year forward valuation mean.

While the recovery could be attributed partly to the rebound in the benchmark indices (Nifty up 29 per