2 hrs ago
Accenture Results Lift Indian IT Stocks Ahead Of Monday
Accenture is a large technology-services company that reported stronger results than investors expected.
Its revenue increased 6.3% from the same quarter a year earlier to $18.7 billion.
Its earnings and new project bookings also beat expectations.
This made investors more confident about technology companies.
Many Indian IT companies get more than half of their business from the United States.
As a result, experts think Indian IT shares could open much higher on Monday.
However, they warn that the rise may not last for a long time.
They suggest taking profits after a gain of more than 5% rather than holding only because of this news.
Accenture reported better-than-expected fiscal fourth-quarter earnings, revenue and bookings, while providing an upbeat outlook.
Infosys and Wipro shares rose sharply in U.S. trading after the results, finishing nearly 6% and more than 6% higher, respectively.
Experts expect the buying to support a strong opening for Indian IT stocks when Indian markets reopen Monday.
Analysts cited Indian IT companies’ heavy reliance on U.S. business and Accenture’s importance to that market.
Experts named Sagility, Birlasoft, Mphasis, Persistent Systems and LTIMindtree as potential outperformers but advised investors to book profits after gains above 5%.
- Who
- Accenture, Indian IT companies including Infosys and Wipro, and market experts Avinash Gorakshkar and Mahesh M Ojha.
- What
- Better-than-expected Accenture results triggered strong buying in Indian IT stocks traded in the United States and raised expectations of a positive Indian market opening.
- Where
- The buying occurred in U.S. trading, while the expected follow-on move concerns Indian stock markets.
- When
- Accenture announced its fiscal fourth-quarter results after which U.S.-traded Indian IT shares rose; Indian markets were expected to reopen Monday.
- Why
- Investors expect Indian IT companies to benefit because more than half of their business comes from the United States and Accenture’s results suggested resilient demand for IT projects.
Bullish Outlook
Cautious Outlook
Expected Monday opening
Bullish Outlook
Strong Accenture results and gains in Infosys and Wipro in U.S. trading could lead to strong buying and a gap-up opening for Indian IT stocks.
Cautious Outlook
The experts said the rally could fizzle out soon, so a strong opening may not translate into lasting gains.
Investment approach
Bullish Outlook
Better-than-expected results and resilient IT-project spending support expectations for similar second-quarter results from major Indian IT companies.
Cautious Outlook
Investors were advised to book profits after an intraday gain of more than 5% rather than hold the positions for the long term.
Key facts
- Accenture fiscal Q4 earnings
- GAAP earnings were $3.29 per share, beating analysts’ estimates by 11 cents.
- Accenture revenue
- Revenue rose 6.3% year over year to $18.7 billion, about $660 million above expectations.
- Accenture bookings
- Fourth-quarter bookings increased 4% year over year to $22.2 billion.
- U.S. exposure
- Experts said Indian IT companies receive more than 50% of their average business from the United States.
- U.S.-traded shares
- Infosys finished nearly 6% higher and Wipro more than 6% higher in U.S. trading after the results.
- Index exposure
- IT stocks account for about 10% of the Nifty 50 and about 12% of the BSE Sensex, according to Avinash Gorakshkar.
- Suggested stocks
- Mahesh M Ojha identified Sagility, Birlasoft, Mphasis, Persistent Systems and LTIMindtree as possible outperformers.
Quotes
Avinash Gorakshkar
Founder of Avinash Mentor Research
“After the strong Accenture results, Indian IT stocks witnessed strong buying in the US stock market. Shares of Infosys and Wipro skyrocketed after the Accenture results, which is expected to fuel the positive sentiments about the Indian IT stocks of Dalal Street bulls.”
livemint.com
“Indian IT companies draw more than 50% of their business from the US. Accenture plays a big role in it. Some Indian IT companies draw more than 50% of their business from the US. So, we are bullish on IT stocks when trade resumes on Monday.”
livemint.com
Sources
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