The only Nifty IT index constituent that is trading in the green is Persistent Systems. Global brokerage firm CLSA said their top sector pick is Persistent Systems, which they have upgraded to a High-Conviction Outperform. CLSA has a price target of Rs 9,267 on the stock.
CLSA believes that generative artificial intelligence (AI) has potential to transform human lives. The brokerage sees AI sparking a new tech cycle, significantly benefiting Indian IT services firms.
The Indian IT stocks are reeling under pressure due to an expected slowdown in the US economy and uncertainty surrounding US trade policy.Further, the Dow Jones fell almost 900 points on March 10, as the Wall Street witnessed a painful trading session over looming fears of a recession in the US. This is the biggest single-day fall of this year for the 30-stock index.
With declining business and consumer confidence, investors remain cautious about the Indian IT sector, which relies heavily on the US for revenue.
Within the IT space, growth will be much better for mid-tier IT firms compared to large-cap IT players. Siddhartha Khemka of Motilal Oswal notes that while tier-one IT firms were on a recovery path, growth expectations have been pushed back due to renewed concerns about the US economy.
Khemka prefers Persistent Systems and Coforge within the mid-tier IT pack.
“If you look at tier-two IT companies, the valuations were a bit high on back of the strong delivery. And two stocks, particularly that we like is Persistent Systems and Coforge, both of which we like, and we believe these are levels to start accumulating,” he said.
Despite near-term sentiment remaining weak for the next 1–2 quarters, Khemka mentioned that strong order books, steady execution, and attractive valuations provide a long-term investment opportunity.
The Nifty IT index is currently trading 1.62% lower at 37,034.90.
