DBT Bureau
Bengaluru, 26 September 2024
Nifty IT index has been one of the major performing indices, pushing up the Nifty to record high levels. In last three months, Nifty IT index has gained close to 20%, indicating strong buying interest among investors.
On Thursday, Nifty IT index is trading 0.67% up at 42,245 in the early morning trade. Most analysts see IT and FMCG stocks as safer bets given the record high level of major market gauges.
Such bullish trend raises hopes of an earning upgrade in the second quarter. During July-September period, results of which will be announced from the first week of October onwards, most IT companies are likely to post better results.
According to an Economic Times report, key IT services providers signed at least 33 deals in July and August of Q2FY25.
Though higher number of deals don’t guarantee improvement in revenue accretion, sources in the know said that revenue translation is expected to be better in the second quarters.
Due to short-tenure of deals, enterprises are giving work orders for those deals, which have immediate RoI (return on investment) possibilities. Therefore, IT firms are expected to see better deal to revenue conversion ratio in the second quarter.
US Federal Reserve’s interest rate cut by 50 basis points will also help some demand coming back in the technology spending space. Though most of the demand will come with a lag, it will definitely boost sentiments.
Meanwhile, technology demand from the US-based enterprises will also be influenced by the upcoming Presidential election on November 5.
