Nifty IT index could double in one year; Stay put


Published On: Wednesday, June 9, 2021 | By:

Nifty IT index could double in one year; Stay put

In spite of over 170 percent rally since April last year, the gains in Information Technology (IT) stocks are showing no signs of abating. The Nifty IT index was ruling 0.5 percent higher on the National Stock Exchange (NSE) in today's(9th June 2021) intra-day trade, has soared 14 percent so far in the calendar year 2021. According to analysts, the technology upcycle has just begun and sector players are set to reap benefits of the digital boom and cloud adoption. "A distinct trait of this upcycle would be its margin-accretive nature. The biggest differentiator for this cycle is the acceleration it has triggered towards technology spends and quicker decision-making than any other upcycle in the past. All in all, we remain confident that like in past three IT upcycles, multiple re-ratings will be sharp in the early phase of this cycle as well, followed by earnings upgrades as the Street plays catch up," it said in a recent sector-specific report.

The three industry themes of hyper scalers, digital disruption across the IT services industry and digital transformation of the BPM industry to technology would give mid-cap IT players like Birlasoft, Coforge, and First Source Solutions substantial advantage.

On the technical front, the Nifty IT index is expected to double in one year if it rallies another 400 points and hit 28,000-mark. Although, rally may be aggressive in select few players than others, the overall performance of IT stocks could remain phenomenal as stocks are seeing healthy buying even in the overbought category.

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