IT firms will soon start announcing their quarterly earnings. What’s the call on the sector now?  Well, JPMorgan has turned Neutral on the sector as they see signs of “growth bottoming out over the next few months which could support expanded sector multiples.” According to them, five themes would be driving the sector going forward, “pivot to cost-saving, declining drags from laggard industries (TMT, BFSI), pro-cyclicality, near-term GenAI prep work, and a very low base in CY23. This should drive stock performance in CY24.”

On the stock front, the brokerage house upgraded Infosys and L&T Technology to ‘Overweight’ from ‘Neutral’. It also upgraded the rating on Tata Consultancy Services, HCL Technologies, Mphasis, and Persistent to ‘Neutral’. However, the brokerage house kept the rating unchanged on Tech Mahindra, Wipro, LTI Mindtree, KPIT Technology, and Tata Elxsi to ‘Underweight’. 

Another key broking firm, Jefferies has meanwhile upgraded rating on Infosys, Coforge, and LTI Mindtree to Buy on the back of strong growth visibility and relative valuation comfort.