Latest news with #NiftyITIndex
Economic Times
21 hours ago
- Business
- Economic Times
NFO Alert: DSP Mutual Fund launches index funds on IT and Healthcare sectors
The IT and healthcare sectors benefit from diversified global revenues, which reduce their dependence on domestic economic cycles. DSP Mutual Fund has launched two new index funds — the DSP Nifty IT Index Fund and the DSP Nifty Healthcare Index Fund. These offerings provide investors a strategic avenue to gain exposure to the IT and healthcare sectors, both known for their relative resilience in volatile equity markets. The new fund offer, or NFO, for both funds, is open for subscription and will close on June 16. The DSP Nifty IT Index Fund aims to replicate/track the Nifty IT Index and would be investing in the top 10 IT companies by free float market capitalisation. The Indian IT sector has demonstrated smooth earnings growth with relatively low earnings variability, which has helped to reduce earnings surprises. Over the last 12 years, the Nifty IT index has delivered consistent earnings growth, outperforming many other sectors. While the IT sector has underperformed the broader market in recent years, historical cycles suggest potential for a turnaround, making this an opportune moment for investors to consider sector-focused exposure. Also Read | NFO Insight: Nippon Income Plus Arbitrage Active FoF opens. Is it time to add this emerging category to your portfolio? The DSP Nifty Healthcare Index Fund aims to replicate or track the Nifty Healthcare Index, investing in the top 20 healthcare companies based on free-float market capitalisation. Notably, India's healthcare sector accounts for a relatively small share of the country's total market capitalisation compared to developed and emerging markets. This indicates significant growth potential, supported by expanding healthcare infrastructure, rising insurance penetration, and ongoing medical innovation. "The launch of the DSP Nifty IT Index Fund and DSP Nifty Healthcare Index Fund offers investors a balanced approach to participate in sectors that combine growth with resilience. In uncertain market environments, defensive sectors like IT and healthcare have seen lower drawdowns, with the potential to deliver attractive returns,' said Anil Ghelani, CFA, Head of Passive Investments & Products at DSP Mutual Fund.'By strategically including low-beta sectors such as Information Technology and Healthcare, investors can construct a more resilient and efficient portfolio, which may help them optimise returns and effectively manage market risk. Defensive sectors are currently underrepresented in broader indices, and history shows that when underweight, sectors like IT and Healthcare tend to outperform the market over the following year. Our disciplined passive management approach aims to closely track these sectors, helping investors capture structural growth with lower volatility,' said Gurjeet Kalra, Business Head – Passive Funds, DSP Mutual Read | Gold prices may fall 12-15% in next 2 months, warns Quant Mutual Fund Defensive sectors such as Information Technology (IT) and Healthcare have historically exhibited low beta relative to the broader equity market, meaning they are less affected by market downturns, economic crises, or geopolitical events. For instance, during the Global Financial Crisis (Jan – Oct 2008) and the Covid-19 pandemic (Jan – March 2020), Nifty Healthcare and Nifty IT indices outperformed the broader Nifty 500 Index by experiencing lower drawdowns and quicker sectors benefit from diversified global revenues, which reduce their dependence on domestic economic cycles. To put this in context of numbers, ~ 96% of total revenues for the companies in the Nifty IT Index come from various global markets other than India. Notably, 52% of the total revenues for companies in the Nifty Healthcare Index are derived from global markets, compared to just 25% for companies in the Nifty 50 Index.
Time of India
21 hours ago
- Business
- Time of India
NFO Alert: DSP Mutual Fund launches index funds on IT and Healthcare sectors
DSP Mutual Fund has launched two new index funds — the DSP Nifty IT Index Fund and the DSP Nifty Healthcare Index Fund . These offerings provide investors a strategic avenue to gain exposure to the IT and healthcare sectors, both known for their relative resilience in volatile equity markets. The new fund offer, or NFO , for both funds, is open for subscription and will close on June 16. The DSP Nifty IT Index Fund aims to replicate/track the Nifty IT Index and would be investing in the top 10 IT companies by free float market capitalisation. The Indian IT sector has demonstrated smooth earnings growth with relatively low earnings variability, which has helped to reduce earnings surprises. Over the last 12 years, the Nifty IT index has delivered consistent earnings growth, outperforming many other sectors. While the IT sector has underperformed the broader market in recent years, historical cycles suggest potential for a turnaround, making this an opportune moment for investors to consider sector-focused exposure. Best MF to invest Looking for the best mutual funds to invest? Here are our recommendations. View Details » Also Read | NFO Insight: Nippon Income Plus Arbitrage Active FoF opens. Is it time to add this emerging category to your portfolio? The DSP Nifty Healthcare Index Fund aims to replicate or track the Nifty Healthcare Index, investing in the top 20 healthcare companies based on free-float market capitalisation. Notably, India's healthcare sector accounts for a relatively small share of the country's total market capitalisation compared to developed and emerging markets. This indicates significant growth potential, supported by expanding healthcare infrastructure, rising insurance penetration, and ongoing medical innovation. Live Events "The launch of the DSP Nifty IT Index Fund and DSP Nifty Healthcare Index Fund offers investors a balanced approach to participate in sectors that combine growth with resilience. In uncertain market environments, defensive sectors like IT and healthcare have seen lower drawdowns, with the potential to deliver attractive returns,' said Anil Ghelani, CFA, Head of Passive Investments & Products at DSP Mutual Fund. 'By strategically including low-beta sectors such as Information Technology and Healthcare, investors can construct a more resilient and efficient portfolio, which may help them optimise returns and effectively manage market risk. Defensive sectors are currently underrepresented in broader indices, and history shows that when underweight, sectors like IT and Healthcare tend to outperform the market over the following year. Our disciplined passive management approach aims to closely track these sectors, helping investors capture structural growth with lower volatility,' said Gurjeet Kalra, Business Head – Passive Funds, DSP Mutual Fund. Also Read | Gold prices may fall 12-15% in next 2 months, warns Quant Mutual Fund Defensive sectors such as Information Technology (IT) and Healthcare have historically exhibited low beta relative to the broader equity market, meaning they are less affected by market downturns, economic crises, or geopolitical events. For instance, during the Global Financial Crisis (Jan – Oct 2008) and the Covid-19 pandemic (Jan – March 2020), Nifty Healthcare and Nifty IT indices outperformed the broader Nifty 500 Index by experiencing lower drawdowns and quicker recoveries. These sectors benefit from diversified global revenues, which reduce their dependence on domestic economic cycles. To put this in context of numbers, ~ 96% of total revenues for the companies in the Nifty IT Index come from various global markets other than India. Notably, 52% of the total revenues for companies in the Nifty Healthcare Index are derived from global markets, compared to just 25% for companies in the Nifty 50 Index.
Indian Express
27-05-2025
- Business
- Indian Express
Is the TCS slowdown a buying opportunity?
Tata Consultancy Services (TCS), the largest IT services stock on the NSE and the most valuable company under Tata Sons, paid its highest-ever dividend in FY25. Despite this, TCS shares underperformed the broader market, falling 16% year-to-date, while the Nifty 50 Index rose 3.27%. This underperformance wasn't isolated. The entire IT sector witnessed a downturn, with the Nifty IT Index declining 14.6% amid weak global macroeconomic indicators, especially in the United States, which accounts for nearly 70% of India's IT export revenue. Fears of a recession in North America slowed revenue growth for several IT services companies with high exposure to the US. The recent downgrade of the US long-term issuer and senior unsecured ratings by Moody's from AAA to Aa1 has only deepened concerns about a delay in the recovery of India's IT sector, signaling slow revenue and earnings growth for FY26 as well. TCS's revenue growth in FY25 was largely driven by a significant contract with BSNL. With revenue from this deal ramping down, there are concerns about how TCS will fill the revenue gap in FY26. A slowdown in revenue could also impact TCS's dividend per share. But why is that such a big deal? TCS is the crown jewel in the Tata Sons portfolio and its largest dividend contributor. Tata Sons owns 71.7% of TCS, and in FY24, TCS paid Rs 18,958 crore in dividends, accounting for 88% of Tata Sons' total dividend income. In FY25, this figure rose to Rs 44,962 crore, of which Tata Sons is estimated to have received Rs 32,269 crore. Dividends from TCS represent 49% of Tata Sons' standalone revenue TCS dividend and share buyback accounted for ~92% of Tata Sons' operating income during the FY17-FY24 period. Tata Sons uses the income received from its holdings to invest in new businesses, such as the funding for the turnaround of Air India, the Rs 91,000 crore Dholera semiconductor fab first plant project, and the Rs 27,000 crore Assam semiconductor ATMP project. In FY24, TCS's dividend and buyback proceeds helped Tata Sons to repay all its debt and avoid the need to list on the stock exchanges, giving it the flexibility to undertake high-risk, capital-intensive projects. The significance of TCS dividends in Tata Sons' finances makes one wonder whether a slowdown in TCS earnings could spell concern for Tata Sons. Analysing the trend of the last 10 years, TCS revenue growth has slowed in FY18 (the US-China trade war), FY21 (pandemic), and FY24 (recession fears). The slowdown in revenue growth led to a decline in dividends paid as earnings fell. Each time, the company rebounded strongly. After the pandemic-induced slowdown in FY21, TCS saw a 16-18% revenue growth over the next two years. It saw strong deal momentum in FY24, with total contract value (TCV) up 25% to $42.7 billion as global macro outlook showed signs of improvement with disinflation and monetary easing, supporting growth. While there was continued pressure on discretionary spending, cost optimisation and cloud transformation projects led the deal momentum. However, macroeconomic headwinds resurfaced after Trump's retaliatory tariffs, which pulled down TCS's order book by 8% in FY25. The company believes this uncertainty is temporary and FY26 could be better than FY25. At Q4 FY25 earnings call, K Krithivasan, CEO, TCS, said the company will start investing more in technology transformation or technology adoption once uncertainty clears. The last 10-year trend shows TCS has remained resilient to macroeconomic headwinds and consistently paid dividends. It even paid a special dividend for three years in a row for the first time since its IPO. One possible reason for the special dividend could be that the slowdown in the US was partially offset by strong growth in India, where TCS has been involved in nation-building transformation projects. Ever since TCS was formed, IT services exports, especially to the US, have been driving India's IT stocks. Trump's retaliatory tariffs were not directly targeted at IT services, hinting at the importance of IT service exports to both countries. However, tariffs in other sectors could increase costs for clients in retail, airlines, travel, and hospitality, and reduce their IT budgets, which could indirectly impact the revenue of IT service companies. In the meantime, government spending on IT is driving demand in India. Gartner forecasts India's IT services spending to grow 11.4% in 2025 from 8.8% in 2024 and 4.8% in 2023. TCS could benefit from this increasing spending. The company saw its revenue growth from India accelerate in the last three years, surpassing that of the US and Europe. India's fast-growing IT spending is bridging the gap created by the slowdown in the US IT spending. However, India is still a long way from bringing its IT spending to the level of the US and emerging as a key market for IT services. According to K Krithivasan, two new growth opportunities could open up in the medium to long term, once tariff uncertainties settle: Like every technology trend, AI will first disrupt the current IT service market and then create opportunities in new areas. TCS is approaching these new areas in three ways: While it is true that these are challenging times for the IT sector, the concerns of TCS earnings slowdown are perhaps overblown. TCS share price is down 22% from its December 2024 high and is trading at a 25.8x price-to-earnings (P/E) ratio, which is below its 10-year median of 26.7x and sector median of 30.28x. Brokerages have reduced their price target for TCS in light of a weak demand environment amid global macroeconomic uncertainty. However, some brokerages such as Centrum remain optimistic for the medium-term as they expect demand to be driven by strong GenAI deal momentum. To answer the question, could a slowdown in TCS earnings concern Tata Sons in the short term? Yes. However, the current slowdown could be considered a step back before taking a leap at AI opportunities. TCS continues to remain a lucrative IT stock with 52.38% Return on Equity, which is higher than its peers (Infosys – 28.8%, HCL Tech – 25%). It is an interesting stock to add to your watchlist, as it is well-positioned to benefit from increasing domestic demand and the technological shift to cloud. Note: We have relied on data from throughout this article. Only in cases where the data was not available, have we used an alternate, but widely used and accepted source of information. Puja Tayal is a financial writer with over 17 years of experience in the field of fundamental research. Disclosure: The writer and his dependents do not hold the stocks discussed in this article. The website managers, its employee(s), and contributors/writers/authors of articles have or may have an outstanding buy or sell position or holding in the securities, options on securities or other related investments of issuers and/or companies discussed therein. The content of the articles and the interpretation of data are solely the personal views of the contributors/ writers/authors. Investors must make their own investment decisions based on their specific objectives, resources and only after consulting such independent advisors as may be necessary.
News18
23-04-2025
- Business
- News18
Nifty IT Index Rises 3% Post HCLTech Q4 Earnings. Time To Add IT Stocks To Your Portfolio?
Last Updated: The Nifty IT index surged 3% to hit 35,057.80 on the National Stock Exchange (NSE) during Wednesday's intra-day trade Nifty IT Index Rises: The Nifty IT index surged 3% to hit 35,057.80 on the National Stock Exchange (NSE) during Wednesday's intra-day trade, driven by strong buying in frontline IT stocks. As of 9:25 AM, the Nifty IT index was the top-performing sectoral index, up 3.3%, compared to a 0.76% rise in the benchmark Nifty 50. HCLTech led the surge, rising nearly 7% in early trade after announcing its fourth-quarter earnings on Tuesday. Other frontline IT names also posted strong gains, with Tech Mahindra and Infosys climbing over 3% and Tata Consultancy Services (TCS) adding close to 2%. The strength in IT stocks gave an early lift to benchmark indices Sensex and Nifty. This rebound in tech shares comes despite conservative revenue forecasts from some of the sector's largest players. Both TCS and Infosys have issued subdued growth guidance for the current fiscal year, citing macroeconomic uncertainties and restrained demand in key Western markets. IT Stocks in Action Shares of major IT companies rallied up to 7% on the NSE in Wednesday's trade. HCL Technologies led the gains with a 7% surge to Rs 1,582.30. Other notable gainers included Coforge, Tech Mahindra, and Mphasis, each rising around 4%. LTIMindtree, Persistent Systems, Infosys, Wipro, and Tata Consultancy Services (TCS) also gained between 2% and 3%. Despite the current rebound, the Nifty IT index has underperformed so far in calendar year 2025, declining 19% against a 2.4% gain in the Nifty 50. Stocks like TCS, Infosys, HCL Technologies, Tech Mahindra, Wipro, and LTIMindtree have dropped between 16% and 22% due to persistent growth concerns. Analysts attribute the underperformance to fears of a US recession, uncertainty around US tariffs, and their potential impact on the supply chain. These factors could affect client decision-making, particularly with regard to discretionary technology spending in 2025. What's Fueling the Rally Today? Wednesday's surge in IT stocks follows a strong performance in the US markets, with the Nasdaq Composite rallying 429.52 points (2.71%) to close at 16,300.42 on Tuesday. Closer to home, HCL Technologies' March quarter results, while soft, exceeded expectations and contributed to bullish sentiment in the sector. HCL Technologies has projected revenue growth of 2% to 5% in constant currency terms for FY26, which, although lower than past years' guidance, is ahead of Infosys' 0% to 3% growth forecast. The company also reported record net new bookings worth $3 billion in Q4, with FY25's total contract value (TCV) reaching $9.4 billion—driven largely by its engineering and R&D services. ICICI Securities noted that the company hasn't faced major deal cancellations, apart from one large project being shelved. The firm also highlighted potential fresher hiring amid a strong deal pipeline. HCLTech's guidance for FY26 includes 2–5% revenue growth (1–4% organically) and EBIT margins between 18–19%, with management expressing cautious optimism despite macro challenges. Historical Context: 2009 vs 2020 According to Kotak Institutional Equities, the IT services sector was more severely impacted during the 2009 financial crisis than in 2020. In 2009, financial services—a key vertical for Indian IT—saw massive cutbacks, with companies slashing tech spending after years of heavy investment. Conversely, in 2020, IT became a critical enabler as businesses pivoted online during lockdowns. This led to a surge in discretionary spending, cloud migration, and digital transformation initiatives. While IT services saw muted growth in 2020, the industry rebounded sharply in 2021 and 2022, posting its highest-ever growth rates. Valuation Bottoms in Past Crises Kotak analysts suggest two approaches to estimating where IT stocks might bottom—historical valuation multiples and first-principle analysis. In 2009, Infosys bottomed at 11x one-year forward earnings, while during the Covid-19 downturn, TCS hit a bottom at 18x. However, with the sector's competitive dynamics having evolved, analysts believe valuations could stabilize at different levels this time. First Published:
Economic Times
22-04-2025
- Business
- Economic Times
Nifty roars past 24,000 for first time since January
Agencies Live Events (You can now subscribe to our (You can now subscribe to our ETMarkets WhatsApp channel Mumbai: India's equity indices rose over 1% on Monday - extending gains for the fifth straight trading session - with the Nifty closing above 24,000 for the first time since January 3, led by upsides in Information Technology (IT) and banking stocks after fourth quarter earnings of select heavyweights in these sectors beat expectations. Analysts said upsides could continue due to short covering until the monthly derivatives expiry on April 24, as investors await earnings of other large blue-chip companies later this NSE Nifty gained 1.2%, or 273.90 points, to finish at 24,125.55. The BSE Sensex moved 1.1%, or 855.30 points, higher at 79,408.50. Both indices have surged up to 6% each in the past five trading sessions."The gains in the market were driven by the strong results by the benchmark heavyweights such as ICICI Bank and HDFC Bank , while the optimistic guidance on improving outlook by IT bellwether Infosys triggered a short squeeze in the IT stocks ," said Siddartha Khemka, Head of Retail Research, Motilal Oswal Financial Services Khemka said India's trade talks with the US and the American Vice President J D Vance's visit to India are positive for India. Tech Mahindra emerged as the top gainer on both indices, soaring 5.14% on NSE while Trent and IndusInd Bank gained over 4% sectoral indices except FMCG closed higher. The Nifty IT Index surged 2.3% on Monday while Bank Nifty gained 1.9% and hit an all-time high."IT stocks witnessed short covering because most of the negatives are already priced in while banking stocks saw buildup of long positions after investors gained confidence in the latter post ICICI Bank and HDFC Bank's earnings," said Rajesh Palviya, Head of Technical and Derivatives, Axis said the Nifty can move towards 24,500 level, with 23,800 as a key support level. Since the prospects of banks are tied to the Indian economy, investors perceive the sector to be insulated from the uncertainties around tariffs and the trade war. Tech Mahindra, Axis Bank Hindustan Unilever and HCL Technologies , among others, will report earnings for the quarter ended March 31 this week. Khemka said short covering is anticipated to continue in the market, and the renewed buying by foreign investors in the recent sessions is supporting the portfolio investors (FPIs) bought shares worth a net Rs 1,970.2 crore on Monday. Their domestic counterparts sold shares worth Rs 246.6 crore. In the last three trading sessions, overseas investors divested Rs 14,600 crore of equities in Nifty Mid-cap 150 index and the Small-cap 250 index rose 2.2% and 1.9%, respectively. In the past week, the mid-cap and small-cap indices jumped over 6% of the 4,247 shares traded on BSE, 2,903 advanced, while 1,199 declined. Elsewhere in Asia, China moved 0.5% higher while Indonesia and South Korea advanced 0.1% and 0.2%, respectively. Taiwan and Japan fell 1.5% and 1.3%.
