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Nirmal Bang Report
In Q2 FY22, the Nifty IT index outperformed the Nifty by 800 basis points and the Nifty Bank by 1250 bps.
This was due to the continued strong demand conditions, low interest scenario globally, worries around the largest competing sector, financials, on credit growth and asset quality.
Nifty IT in Q2 FY22 was driven by HCL Technologies Ltd. and Tech Mahindra Ltd. in tier-1 pack and by strong returns within the tier-II set (Mindtree Ltd. and L&T Technology Services Ltd. up 62% each, Larsen and Toubro Infotech Ltd. up 42%).
Outperformance of HCL Tech and Tech Mahindra was likely because investors were chasing , with peers trading at multiples never seen since 2007.
Also, investors likely sense that FY23 could see revenue acceleration for both these companies - something that cannot be said for other tier-I peers.
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