NEW DELHI: The BSE IT index closed nearly 2 per cent higher on Tuesday, led by gains Infosys, TCS and HCL, becoming the second-largest sectoral index gainer following Cognizant's stellar results for the June 2012 quarter.
Cognizant's performance helped ease worries over the outsourcing demand scenario. The Nasdaq-listed company reported a strong sequential revenue growth for the quarter and said the tempo would continue high for the rest of the year.
Tata Consultancy Services closed 2.8 per cent higher at Rs 1,264, HCL Technologies advanced 1.4 per cent to Rs 530.85, and Infosys was up 1.9 per cent to Rs 2,255.
"Cognizant's revenue guidance definitely augurs well for the whole IT sector and with right stock selection in the sector, such as HCL Tech and TCS, an investor can reap benefits," said Prakash Diwan, chief portfolio strategist at Prakash Diwan's Wealth Circle.
"The sector will outperform if the rupee slips to the 57 58-plus range. The IT sector as a whole will do very well, otherwise it is going to be difficult for the sector to come up with some encouraging dollar numbers," Diwan added.
Cognizant reported faster topline growth compared with Indian peers TCS, Infosys, Wipro and HCL Technologies on a sequential as well as YoY basis.
"This reflects the successful implementation of Cognizant's strategy to reinvest a chunk of its operating profit back in the business, thereby intentionally keeping profitability at a relatively lower level," reported. "The company's September 2012 quarter guidance reflects strong momentum. It expects to grow revenue by 4.5 per cent to $1,875 million. Its closest peer, Infosys, stayed away from giving any guidance for the quarter."
Source : TOI