IT Stocks Look Set To Break The June Jinx; Index Up 2.5%

After declining in the month of June each of the last two years, the NSE Nifty IT Index is up more than three percent so far in June this year.

The index fell 2.4 percent in June 2016 and 4.64 percent in June 2015, after posting gains in the month of June for six straight years.

However, Urmil Shah of IDBI Capital told BloombergQuint he is cautious on the large-cap information technology names. The sector is impacted by multiple headwinds like currency appreciation and visa issue, he added.

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Here’s an analysis of the revenue market share of the top five companies in the information technology sector over the past five financial years:

Tata Consultancy Services Ltd. commanded a revenue market share of 33.5 percent in the financial year ended March 2012, and is expected to increase it to 37.3 percent in the current financial year, according to the estimate of analysts tracked by Bloomberg.

HCL Technologies Ltd., which is the best performing stock in the Nifty IT Index over the last 12 months, is expected to improve its revenue market share to 15.3 percent in the current financial year from 14.3 percent five years ago, according to analysts tracked by Bloomberg. Shah from IDBI Capital concurred.

Stock price of Tech Mahindra Ltd. has more than doubled in the past five years, while its revenue market share has risen to 9 percent from 3.8 percent in the same period.

Wipro Ltd. has seen its revenue market share decline from 25.5 percent in the year ended March 2012 to 17.3 percent last year. A similar trend can be seen in Infosys Ltd., too, where the market share has declined from 23.1 percent to 21.6 percent during the same period. Analysts tracked by Bloomberg, expect the revenue share for Infosys to be 21.4 percent and Wipro to be 16.7 percent for the current financial year.