Strong Infosys, Wipro Q3 earnings set up Sensex’s dash for 50,000

Strong Infosys, Wipro Q3 earnings set up Sensex’s dash for 50,000

MUMBAI: The better-than-expected December quarter earnings performance by index heavyweight Infosys and Wipro today may have set up the BSE Sensex index for a dash to move above the psychologically crucial level of 50,000 points on Thursday.

Infosys earlier today surprised investors by announcing a higher-than-expected increase in its revenue growth guidance for 2020-21. The blockbuster earnings by the index heavyweight, which has a weight of over 9 per cent in the Sensex, will aid the BSE Sensex post strong gains on Thursday, said analysts.

Similarly, Wipro reported strong earnings growth for the December quarter just like its peers Tata Consultancy Services and Infosys. The company also gave firm sales growth guidance for the March quarter, suggesting that revenues may grow at 1.5-3.5 per cent.

Infosys American Depository Receipts rose over 2 per cent in pre-market trading on the New York Stock Exchange. Wipro’s ADRs also surged nearly 3 per cent in pre-market trading in the NYSE.

“There is a high possibility of further re-rating of valuations for IT companies…the trend is likely to continue for a long time and yes, the Sensex at 50,000 points is easily possible,” said Vinod Nair, head of research at Geojit Financial Services.

Overall, the investors will also bank on the buying spree of foreign investors who have continued to pour money into Indian equities as part of the general shift of funds towards emerging market equities in hope of strong rebound in global economic activity and trade.

Foreign portfolio investors have net bought Indian stocks worth $18 billion since November as they chased returns amid surging negative yielding debt and optimism for global recovery in the backdrop of Covid-19 vaccine rollout. Nilesh Shah, managing director of Kotak Mahindra Asset Management Company, earlier today said that he expects foreign investors to remain net buyers.

“Many Asian countries have effectively contained the virus – and are further ahead in the economic restart. We see the region’s tech orientation allowing it to benefit from structural growth trends,” said asset manager Blackrock in a recent note.

Today, the BSE-Sensex index ended at 49,492.32, down 24.8 points or 0.1 per cent and the Nifty 50 index closed flat at 14,564.85 points.

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