Infosys, TCS, HCL Tech gain on Cognizant's strong outlook

NEW DELHI: Software services exporters gained on Thursday after Cognizant Technology Solutions Corp forecast current-quarter revenue above market expectations after posting an 18 percent rise in the first quarter.

Infosys Ltd gained 0.5 percent, Tata Consultancy Services Ltd was up 1.1 percent while HCL Technologies Ltd rose 1.9 percent.

US-listed Cognizant rose 3.3 percent.

Jefferies views Cognizant's results and outlook as "an incremental positive" for Indian IT, although it notes that a proposed bill on immigration in the U.S. remains an overhang for the sector.

Still, Jefferies notes Cognizant told analysts during a conference call that clients are not delaying decisions on account of the immigration bill.

"This comes as a relief to us, as we feared that uncertainty could potentially slow the flow of business to Indian IT players in the near term," Jefferies said.

Cognizant continued its scorching pace of revenue expansion, raising hopes of a revival in demand for India's $108-billion (Rs 5.9 lakh crore) information technology industry that has been receiving mixed signals from its top companies.

With a sequential revenue growth of 3.7%, Cognizant remained the fastest-growing offshore outsourcer with sales touching $2.02 billion (Rs 10,900 crore) in the three months to March 31. Its robust growth was driven by higher business from clients in the financial services industry, a segment that rivals Infosys and Wipro have found challenging.

Among the top five India-based outsourcers, Cognizant, Tata Consultancy Services and HCL Technologies have remained bullish in their commentary while Bangalore-based Infosys and Wipro have given out muted signals.

In the June quarter, Cognizant expects sales to grow 5.4% from the March quarter.