IT stocks rally on the back of huge deal wins by Infosys, Wipro

BENGALURU: The Information technology (IT) stocks hogged the limelight on the bourses on Wednesday after IT majors Infosys and Wipro bagged mega multi-year contracts from Germany’s Daimler AG and Metro AG, respectively. 

The S&P BSE IT index surged 2.34 per cent. Among individual stocks, Wipro’s stock on BSE touched a 20 year high at Rs 385.4, a 5.9 per cent increase from the previous close of Rs 364. The IT service provider’s shares had previously touched this price during 2000s. 

On the other hand, Infosys’ share touched Rs 1252.95, a 2.64 per cent high from the previous close of Rs 1220.7. Infosys’ 52 week high share price on BSE stood at Rs 1,259. All other stocks were also trading in green with TCS’ closing at Rs 2,907.2, a 1.27 per cent increase from the previous close. Even mid-tier IT firms — Mindtree, L&T Infotech, Happiest Minds, Tech Mahindra rallied to hit record highs on both BSE and NSE after analysts upgraded their third quarter earnings for the current financial year (Q3 FY21).

Motilal Oswal said that Infosys was one of the fastest, and the most consistent wealth creators between 
1995-2020. The deal wins by Wipro and Infosys, according to the brokerage, will be pivotal in increasing their penetration in Europe, which has historically lagged the US in outsourcing adoption. The deal wins also reinforces a positive stance on the IT services industry.  “Despite rich valuations, we remain positive on the sector alluding to the multi-year growth cycle awaiting the sector,” it said.