IT Stocks Rise As Sensex Jumps By 750 Points: 5 Reasons Why This Is Happening

IT Stocks Rise As Sensex Jumps By 750 Points: 5 Reasons Why This Is Happening
IT Stocks Rise As Sensex Jumps By 750 Points: 5 Reasons Why This Is Happening

Wednesday’s session saw a spectacular charge by the stock market bulls as they reclaimed all ground lost to the bears in the previous session caused by positive news on Covid-19 vaccine development and further hopes of stimulus from governments.

Nifty IT Index Jump

Sensex, the 30-share pack jumped over 750 points while broader NSE Nifty crossed the 10,800 marks in the trade session.

It shows that IT stocks were in huge demand and why not as they have shown better than expected performance in June quarter earnings. 

So, all the sectoral indices were in the green.

In yesterday’s morning trade, the Nifty IT index jumped by 5% or 790 points and climbed at 16,430.70 levels which are and gained most in three months.

Who Are The Top Gainers?

Further, the index comes out as top gainers in today’s trade session and the rally was led by giants like Wipro, Infosys and NIIT Tech.

Some of the shares like Tech Mahindra, Infosys, NIIT Tech and HCL Tech gained over 5% followed by Mphasis, TCS, Mindtree and LTI.

Out of all, Wipro seems to be the top gainer on the index as it hit an upper circuit limit. 

In recent times, the stock surged for more than 15.5% after the information technology services major reported a better than expected performance in the June quarter for the financial year 2020.

Despite the contraction in revenues on a sequential basis, its profitability has improved.

Apart from that, in the recent developments, the company will be acquiring IVIA Servigos de Informatica, which is an IT solutions provider in Brazil for $22.4 mn.

The transaction is expected to be completed in the quarter ending September 30, 2020.

What Does Wipro Say?

“We expanded the margins during the quarter, despite lower revenues, on the back of solid execution of several operational improvements and rupee depreciation. We also continued to sustain robust cash generation with Operating Cash Flows at 174.9% of Net income,” said Jatin Dalal, the Chief Financial Officer of Wipro.

On 15 July, Infosys also announced its quarterly numbers and it performed quite well with a jump of 9.63% it has reached to Rs 911 in NSE and became the top gainer in today’s trade session.

In the meantime, L&T group’s IT firm, Mindtree, has recorded a stellar performance on the bottom-line front during the June 2020 (Q1FY21) period.  

Yesterday, Larsen & Toubro Infotech also announced its Q1 results and today’s session saw a 4.58% increase in stocks as a result.

Mindtree witnessed consolidated net profit rising by 129.8% yoy to Rs213cr In the latest quarter. 

What Are The Key Factors Behind This Rally?

Discovery Of Covid-19 vaccine 

According to the biotech firm,  it would enter the final stage of human trials for its vaccine on July 27.

This will boost the battle against Covid-19 resulting in the first stage of Moderna’s vaccine trial showing the first 45 participants all developed antibodies to the virus.

Q1 Results Release

So far the IT companies have shown better than expected earnings in companies like Wipro, Infosys & L&T and many more.

BOJ Positive Signals

According to the BOJ monetary policy, they show a steady and maintained view of the economy and expect it to gradually emerge from the coronavirus pandemic’s devastating blow, further signaling a pause after delivering stimulus twice so far this year.

The BOJ said, “Japan’s economy is expected to gradually improve from the latter half of this year. But the pace of recovery will be moderate as the effect of the global coronavirus pandemic will remain,” in a quarterly outlook report.

Rally In Global Markets 

The sentiments back home are also caused due to the rally in the global market. 

As benchmark indices from Thailand, South Korea and Japan have also registered gains up to a percent.

Further, the Dow Jones Industrial Average rose over 2 percent, while the S&P 500 gained 1.34 percent and the Nasdaq Composite climbed 0.94 percent, on Tuesday.

Reliance AGM Boost

The 43rd annual general meeting (AGM) scheduled on 15 July also gave a boost since Reliance Industries shares saw a buying interest and were one of the top Sensex contributors.

Further, the stock hit another record high during the day as investors hoped for some big bang announcement from the energy-to-telecom major.

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