Today marks the release of Infosys’ fourth quarter results for the fiscal year 2022–2023, and the market anticipates that these results will be in line with market expectations. But according to stock market experts, the market will be watching for Infosys guidance following the release of Tata Consultancy Services’ or TCS’ Q4 earnings on Wednesday because it would provide a more accurate picture of the Indian IT industry. However, they noted that following the US Fed’s warning of an economic slowdown brought on by the financial crisis in the US, the Indian IT industry is anticipated to face continued challenges in the following one to two quarters.
The decline in the American economy
According to Avinash Gorakshkar, Head of Research at Profitmart Securities, what can be anticipated from Infosys results are “I would advise stock market investors to pay more attention to guidance than quarterly results because it may be difficult for IT companies to sustain their business in the upcoming one to two quarters due to concerns about an impending economic slowdown brought on by the US bank crisis. Any worsening of the US economic crisis could have a significant negative impact on the business volume of Indian IT businesses, which get close to 40% of their revenue from the BFSI sector in the US and Europe.”
Why investing in Infosys or any other IT stock should not be based on stronger Infosys Q4 performance, GCL Broking’s CEO, Ravi Singhal, said: “Layoffs have improved financial results for IT companies, and this is also true for American IT firms. Better Infosys forecast would therefore be a more solid foundation from which to draw any conclusions as opposed to Q4 results. Indian IT companies are anticipated to experience margin pressure in the next quarters as the US Fed has already expressed concerns about the impending US economic slowdown caused by the bank crisis. Hence, I would advise IT stockholders to wait until Infosys releases its forecast and, if they discovered anything unfavourable regarding the margin and dollar projections, to sell their positions in IT companies and wait for the best levels to buy back in.”
Prospects for the Nifty IT index
Executive Director at Choice Broking, Sumeet Bagadia, predicted a decline in the Nifty IT index “The Nifty IT index appears weak on the chart, and if it breaks through the current support level at 28,300 levels, it might get more weaker. Only when the Nifty IT index gives a breakout over 29,100 levels should one start buying IT equities.”
TCS vs. Infosys: Which IT stock should I buy?
Ravi Singhal of GCL Broking advised positional investors to purchase large-cap IT companies at appropriate prices “IT stocks can be a solid alternative for long-term investors to accumulate and keep buy on dips. Nonetheless, the large-cap IT stocks like TCS, Infosys, Wipro, HCL Tech, etc. would lead the early surge. Infosys shares are in a stronger position among these large-cap IT equities than TCS and other securities are. For at least a two-year time horizon, we advise long-term investors to purchase Infosys, followed by TCS, HCL Technologies, etc.”
Disclaimer: Currency Veda does not endorse the opinions or suggestions expressed above by specific analysts or brokerage firms. Before making any financial decisions, we suggest investors to consult with licenced professionals.