Macquarie has upgraded
to outperform and rated and as top picks. The brokerage said its preferred picks in the sector are in the order of HCL, , Wipro and .
The IT sector has been battered recently due to the concerns around fears of a US recession. IT stocks have fallen around 30% from their yearly highs on average. The sell-off in the Nasdaq, rich share valuations and the impact of wage inflation on companies’ operating profitability have hit investor sentiment in the sector of late.
The BSE IT index ended up 1.56% at 30,278.76 on Thursday. The index is down 21.7% from its all-time high of 38,713.3 hit on January 17 this year.
Macquarie said that, unlike in the 2000s, India’s tier-1 IT companies are strategic partners and not glorified staffing providers which will be the first to bear the brunt of cuts.
Channel checks show no change in demand, said Macquarie.
In the banking, financial services and insurance vertical – which is the biggest vertical for most of India’s tier-1 players – the demand is resilient, said Macquarie, pointing at JP Morgan increasing its 2022 tech spending by 12.8%.
Macquarie has maintained an outperform rating on TCS,
, HCL Technologies and Tech Mahindra and trimmed target prices after changing estimates for the fourth quarter results and new US dollar-rupee assumptions.
The brokerage has revised the target price on TCS to ₹4,420 from ₹4,440 and revised Infosys’ target price to ₹2,140 from ₹2,170. On HCL Technologies, Macquarie has raised the target price to ₹1,440 from ₹1,410. On Wipro, it has increased it to ₹660 from ₹630 and on Tech Mahindra to ₹1,730 from ₹1,710.
