Mid-cap IT stocks rallied sharply in the last hour of trade on Monday and outperformed the large-cap IT stocks ahead of the earnings season that begins from Tuesday.

Mid-sized IT firm Hexaware Technologies rallied 21.95 per cent in last half an hour of trade before last minute profit-taking reduced the gains to 13.07 per cent. The stock touched an intra-day high of Rs 557.40 on the BSE before finally closing at Rs 508.95.

The other big mid-cap gainers were Sterlite Technologies (8.53 per cent), KPIT Technologies (5.63 per cent), NIIT (5.41 per cent), Firstsource Solutions (4.23 per cent), NIIT Technologies (3.35 per cent), MindTree (2.15 per cent) and Larsen & Toubro Infotech (1.54 per cent).

Analysts expect higher year-on year revenue growth from Tier-II IT companies in the April-June 2018 quarter.

“The usual Q1 seasonal strength coupled with benefits from currency are expected to result in continued recovery for the sector. Growth trends however are likely to be polarised with USD revenue growth for Tier-I expected at 8 per cent YoY and that for Tier-II at 16 per cent YoY,” said Motilal Oswal in its results preview for the sector.

The biggest Indian company by market capitalisation, Tata Consultancy Services, however fell 1.34 per cent, capping the gains on BSE IT Index to just 0.59 per cent and on the NSE Nifty IT Index to 0.66 per cent. TCS will announce its first quarter results today.

Other large-cap IT stocks gained between 0.95 per cent to 1.86 per cent, with Infosys up 1.26 per cent, HCL Technologies up 1.86 per cent, Tech Mahindra up 1.85 per cent and Wipro up 0.95 per cent.

While there has been a sharp run-up in IT stocks over the past three quarters on expectations of a pick-up in global IT spends, along with rupee depreciation against the dollar, analysts see a near-term halt to the bull run in IT stocks.

Rahul Jain, senior research analyst, Emkay Global Financial Services, in a preview of the IT sector, said, “Traditionally, Q1 and Q2 have been the strongest quarters for Indian IT service providers’ due to ramp-ups post-finalisation of client budgets and higher number of working days. However, H1 also sees increase in expenses due to wage hikes and visa costs.”