Infosys VS TCS VS Wipro- Which one should you buy as IT stocks hit a new 52-week low?

IT stocks fall- Which one to choose?

IT stocks

The IT stocks have fallen to a new 52-week low. Infosys is down 21%, whereas Wipro is down almost 45%. TCS has been down 22% in the last year. On a YTD basis, the Indian IT stocks have lost up to 30%. TCS is down to Rs 3010, which is down 21.16% YTD. Infosys is down to Rs 1401, which is 26% down YTD. Wipro is down to Rs 393, which is down 45% YTD. 

Related: Best Indian IT stocks for long term

IT stocks downgraded

Goldman Sachs has downgraded Infosys and TCS to a ‘Sell’ rating from the previous ‘Buy’ rating. The stock of Wipro was upgraded, however, as the stock has had a massive fall. It was upgraded from ‘Sell’ to ‘Buy’. As per Goldman Sachs, the company has a strong order book and reasonable valuations. Goldman Sachs believes that the dollar revenue might be affected by IT firms, and that is a major reason for the downgrade. The firm has cut the dollar revenue growth forecast for Indian IT firms for FY24E. But, the company is much more positive about the EBIT margins, as the firm believes that the EBIT margins won’t be affected.

Related: Returns generated by Indian IT stocks in 2021

Should you buy the IT stocks?

The charts of the Indian IT stocks look weak, but the stocks are trading near the major support levels. There can be a further correction of 5-10% levels, but the valuations look reasonable now. Infosys has support at around 1350 levels and major support at around 1300 levels. Wipro has support around Rs 400 levels, but the major support kicks in at Rs 380. As far as TCS is concerned, it is trading around the major support levels of Rs 2900, with further support around Rs 2750. On the upside, it might face resistance at around Rs 3200 levels.

Indian IT firms have a 55-60% market share in the IT outsourcing market. Infosys and TCS being the biggest companies in the sector, are expected to provide decent risk-adjusted returns. The IT stocks are trading at a premium of 20% from the long-term averages, though. The overall sector has delivered good returns in the past, and with the recent correction, investors can consider a staggered entry. Also Read, What are penny stocks: Pros and cons of penny stocks

Markets fall, time to buy IT stocks?

Disclaimer: This article is intended for general information purposes only and should not be construed as investment or legal advice. You should separately obtain independent advice when making decisions in these areas.


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