TCS vs Infosys vs Wipro: Which IT stock stands strongest ahead of the US presidential election 2024? Experts weigh in | Stock Market News

The US presidential election in 2024 could have a major impact on the outlook for Indian IT service providers. The outcome could lead to changes in trade policies, visa regulations, and the movement of the US dollar—all crucial factors for Indian IT players.

Despite headwinds from a demand slowdown and high interest rates in major markets, the IT index has outperformed the benchmark over the last year. The Nifty IT index has gained 31 per cent, while the benchmark Nifty 50 has risen 25 per cent.

Stocks such as Persistent Systems (up 71 per cent), Coforge (up 48 per cent), Tech Mahindra (up 45 per cent), Wipro (up 41 per cent) and HCL Tech (up 39 per cent) have seen solid gains in the last one year. However, shares of Infosys (up 27 per cent) and TCS (up 18 per cent) have underperformed the IT index.

The potential impact of the US election on the Indian IT sector

The US election is a major event for the Indian IT sector as the US is a crucial market for Indian IT service providers. Policies on H-1B visas and potential tax hikes on companies that outsource work are among the key factors that could shape the sector’s future prospects.

Trivesh D, COO of Tradejini, pointed out that the Indian IT sector has historically shown resilience around major US events, including elections, despite its heavy dependence on American clients and the broader US economic climate.

“Since 2020, the Nifty IT index has posted a substantial 104 per cent gain, reflecting the sector’s long-term strength despite recent pullbacks, like the 3.7 per cent decline observed in October. As US fiscal and monetary policies shape demand cycles, Indian IT firms could continue to benefit, especially if the Fed introduces rate cuts or if BFSI spending increases in the tech-driven US economy. Key support for Nifty IT around 39,800 reinforces market confidence in IT’s stability relative to sectors facing larger pressures, such as FMCG and metals,” said Trivesh.

TCS vs Infosys vs Wipro: what should you buy ahead of the US election?

We asked several experts to share their top picks among TCS, Infosys, and Wipro ahead of the US election. Here’s what they had to say:

Prashanth Tapse, Senior VP (Research), Mehta Equities

Picking individual stocks would be a bit difficult and not the right way to look at just ahead of the outcome.

Overall, the sector outlook remains cautiously optimistic on the demand and spending on IT.

There would be some uncertainty about the policy post-election results, particularly if Trump were to become the next president. His America First policies would bring some pressure on the sector as a whole.

“It’s an event, and the impact would be short-term in nature, and we feel the risk is discounted in the Nifty IT index. The downside would be limited from current levels,” said Tapse.

“For the levels to watch, 38,500 can be a level to test and bounce. On stocks, technically, Infosys at ₹1,733 looks good, while Wipro at ₹541 looks weak on charts, and TCS at ₹3,946 looks neutral,” Tapse said.

Sagar Shetty, Research Analyst, StoxBox

With the US elections just a day away, the market prepares for changes in dynamics.

The election’s conclusion will likely clarify the policy direction, bolster investor confidence and stabilise the market.

Also, with the expected rate cut rally coupling, a favourable demand environment is expected.

As the calendar year-end approaches, we expect an improved deal execution pace as the demand environment stabilizes and companies come up with their yearly budget.

“Amongst the tier-1 companies that are likely to be the major beneficiaries of such a scenario, we remain positive on TCS. The positive outlook is on the back of its strong market position and its diverse product offerings. Its deep dive into the talent pool further indicates a positive demand outlook for the company. We also expect improved deal execution and GenAI-led growth, further improving its revenue visibility,” said Shetty.

Ajit Mishra, SVP, Research, Religare Broking

The Nifty IT index has recently dipped after displaying notable resilience during the current correction, primarily due to declines in major IT stocks in the US markets.

It’s now hovering around a key support level, aligning with the 100-day exponential moving average (DEMA).

“Among the IT heavyweights, Infosys has shown relative strength, experiencing only a slight pullback from its all-time high, with a slower pace of decline,” said Mishra.

“We anticipate strong support for Infosys around the ₹1,680 level due to multiple support indicators, presenting an opportunity for investors to gradually accumulate shares with a medium- to long-term perspective,” Mishra said.

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Disclaimer: The views and recommendations above are those of individual analysts, experts, and brokerage firms, not Mint. We advise investors to consult certified experts before making any investment decisions.