Nifty IT rallies over 1,000 points; will the bull run continue?

The Indian markets have surged to record highs, with the Nifty50 trading around 21,150 levels, marking a rise of 230 points or over 1% compared to the previous day’s closing levels. Simultaneously, the S&P BSE Sensex is also at an all-time high, at 70,426, reflecting an increase of approximately 842 points from the previous day’s close.

Trigger 

If you’re wondering what triggered today’s bullish market sentiment, the most significant impact came from the US Federal Reserve’s decision on Wednesday to keep the key interest rates unchanged for the third consecutive time. This decision was based on the acknowledgement of easing inflation over the past year. The Fed Chair Jerome Powell-led Federal Open Market Committee (FOMC) now anticipates three rate hikes next year.

Dark Horse Index of the day

The Nifty IT index has notably emerged as the top gainer among all NSE indexes in the market today. Starting the trading day at 33,451.95, it surged by 385 points, marking a rise of 1.16% compared to the previous day’s closing level of 33,066.65.

As of the time of writing this article, the Nifty IT index is currently trading around 34,078, marking an increase of over 1,000 points from the previous day’s closing levels. Notably, the index experienced a significant gap down on April 18, 2022, opening around 1,180 points lower than the previous day and subsequently declining by approximately 4.58% from its closing of 34,354.75. Furthermore, following that day, the index exhibited a bearish sentiment for several consecutive days, reaching a low point of 26,184 on April 17, 2023, almost a year later.

Since reaching this low, the index has displayed an impressive rally of about 30% within approximately 242 days. In today’s trading session, the index surged back to the 34,000 level, evidenced by a substantial bullish green bar.

IT Stocks Performance 

Turning your attention to the 10 components of the index, it’s interesting to note that all the stocks in the IT index are trading higher than their previous day’s closing prices. Below is the tabular presentation of all the IT component stocks.

As per the data above, it is evident that Mphasis Limited is today’s top gainer among all stocks, soaring by 6.32% from its previous day’s closing price. Following closely are Coforge Limited and Persistent Systems, showing substantial gains of approximately 5.59% and 4.41%, respectively. In contrast, the IT giant TCS displayed relatively lower strength, experiencing an increase of around 1.87% in today’s trading session.

Persistent Systems has been the top performer over the past year, delivering a remarkable return of over 60%. In the last month, it maintained a moderate return of 9%. Meanwhile, Coforge Limited emerged as the second-best performer, with an impressive return of over 55% over the year and a notable 21.48% return in the last month.

Comparing the returns of these companies with their respective benchmark indices over the last year, six companies, namely Persistent Systems, Coforge, LTI Mindtree, HCL Tech, Mphasis, and LT Technologies Limited have outperformed their benchmark indices by generating higher returns.

On the contrary, Tech Mahindra, TCS, Wipro, and Infosys have underperformed during the same period. Moreover, Infosys stands out as an exception, being the only stock that generated a negative return over the last year as mentioned on the chart.

Have you ever heard that stocks in an uptrend are considered suitable buys unless one adheres strictly to the principles of Value Investing? Well, stocks outperforming their benchmark indices are often seen as favourable choices for investment, particularly when purchased at opportune moments to maximize potential gains. Keep these stocks on your radar.

Disclaimer: This blog has been written exclusively for educational purposes. The securities mentioned are only examples and not recommendations. It is based on several secondary sources on the internet and is subject to changes. Please consult an expert before making related decisions.