IT shares buck trend amid market crash; Mphasis, Coforge, Infosys rise up to 5%

Reports coming in for today mention that IT shares bucked the broader market trend and extended their upside in Thursday's market session, even as domestic equity markets crashed, after US inflation data revealed a slower-than-anticipated climb in August, reducing expectations of a interest-rate gain later this month.

The Nifty IT index rose up to 2 percent to touch an intraday high of 28,289.85, extending the previous session's upside. It was the only sectoral index trading in the green, while all other sectoral indices remained in the red.

The benchmark The two key benchmark indices declined up to 1.5 percent and were on course to post their eighth consecutive weekly loss, marking their longest losing streak in 25 years.

Eight of the 10 constituents of the Nifty IT index traded in the green, with Oracle Financial Services Software and LTM being the only exceptions.

IT shares in India took a firm cue from positive global developments after US inflation data released on Wednesday revealed price pressures rising less than anticipated in August, while the previous month's readings were additionally revised softer.

The data prompted traders to sharply reduce expectations of another The US central bank interest-rate gain at its October 28 meeting. Markets were pricing in a 38 percent probability of a hike, down from 50 percent a day earlier and nearly 71 percent a week ago, Reuters noted citing CME Fed Watch.

Expectations of further monetary tightening additionally eased after New York Fed President John Williams stated there was "no urgency" for another move.

Softer expectations of a US interest-rate gain can backing equity markets, including in India, by easing concerns over elevated borrowing costs and improving investor sentiment towards risk assets.

The Fed had boosted interest rates in September for the first time in three years and signalled the possibility of further increases in borrowing costs in the months ahead.

Mphasis was the top gainer, rising up to 5 percent. It was followed by Coforge and Infosys, which rose 4.68 percent and 2.87 percent, respectively.

Persistent Systems, TCS, HCL Technologies, Tech Mahindra and Wipro rose up to 2 percent.

The IT sector's upside come ahead of the results season, which is set to begin the week ahead with TCS announcing its second-quarter results on October 8.

Kotak Institutional Equities anticipates large IT firms to stay subdued, while mid-tier firms such as Persistent Systems, Coforge and Mphasis are likely to deliver stronger expansion.

Kotak anticipates Persistent Systems to report 7 percent sequential expansion, helped by the ramp-up of a mega deal. Coforge is anticipated to grow 4.5 percent, while Mphasis is anticipated to grow 3.5 percent.

The brokerage stated challengers are continuing to gain market share through stronger execution, while larger incumbents are largely focused on defending their existing topline base.

Kotak stated the competitive gap between large vendors has narrowed after several years in which some firms benefited from execution issues at rivals. With most large vendors now operating more efficiently, competitive pressure for deals has increased.