Fundamental Analysis Report – Nifty IT Index – 18 August 2025

Index Overview

The Nifty IT Index tracks India’s leading information technology and digital services companies across ADM (applications), infrastructure/Cloud, ER&D, BPM, cybersecurity, data/AI, and product/platform adjacencies. Key drivers include US/EU tech budgets, USD/INR, deal wins (TCV), pricing/mix, utilisation, wage hikes/attrition, and regulatory/compliance frameworks (data privacy, AI governance).

Institutional Holdings & Fund Activity

FIIs: Accumulate scale franchises with stable US/EU exposure and strong cash generation; tactically rotate on USD strength and rate expectations.
DIIs: Systematic SIP flows via large-cap funds and sector/thematic allocations; buy-the-dip bias in high-quality names.
Impact: Liquidity supportive but sensitive to US macro prints, Fed path, and large-deal commentary.

Financial Health Snapshot (Sector Averages)

Leverage: Low; net-cash positions common among large IT services firms.
Margins: EBITDA margins influenced by pyramid mix, onsite/offshore mix, utilisation, and wage cycles.
Cash Flow: Strong FCF conversion; high dividend/buyback propensity in leaders.
Risks: US recession risk, vendor consolidation, pricing pressure, visa/immigration changes, and rapid AI productivity shifts.

Valuation Check

Current Valuation: Large-caps at premium P/E vs long-term averages; mid-caps at wider dispersion. Tone: Neutral-to-Positive for quality compounders; tactical caution into earnings/US macro volatility.
Drivers: USD/INR trajectory, mega-deal flow, AI-led cost takeout programs, and regulatory clarity on data/AI.

Top & Bottom Performers in Nifty IT Index (Illustrative Financials)

Note: Figures below are structured placeholders; replace with the latest reported numbers before publication.

Company	Revenue (₹ Cr)	Net Profit (₹ Cr)	Gross EBITDA (₹ Cr)	Net EBITDA (₹ Cr)	Operating Expenses (₹ Cr)	Performance Rank
TCS	240,000	46,000	62,000	59,500	178,000	Top Performer 1
Infosys	150,000	26,000	39,000	37,000	111,000	Top Performer 2
HCLTech	110,000	18,500	28,000	26,800	82,000	Top Performer 3
LTIMindtree	40,000	6,000	10,500	10,000	29,500	Top Performer 4
Persistent Systems	15,000	2,200	4,200	4,000	10,800	Top Performer 5
Wipro	90,000	10,500	22,000	21,000	68,000	Bottom Perf. 1
Tech Mahindra	53,000	4,500	10,800	10,200	41,000	Bottom Perf. 2
Mphasis	15,500	1,800	3,800	3,600	11,700	Bottom Perf. 3
Coforge	14,000	1,700	3,500	3,300	10,500	Bottom Perf. 4
L&T Technology Services (LTTS)	10,500	1,600	2,800	2,600	7,900	Bottom Perf. 5

Market Timing Insight – Nifty MidSmall Healthcare Index

Put–Call Ratio (PCR) readings appear elevated, signalling short-term froth/overbought conditions. Prefer staggered entries on pullbacks rather than lump-sum buys.
Short-term: Avoid chasing breakouts; wait for mean reversion.
Medium-term: Use 5–8% dips to build positions in profitable, low-debt, export-ready names.
Long-term: Structural demand intact across domestic formulations, complex generics, hospitals/diagnostics; deploy on corrections.

Investment Strategies

Short-Term (1–3 months): Trade around quarterly earnings, US macro prints, and large-deal announcements. Prefer liquid large-caps; keep tight stops as multiples are sensitive to guidance surprises.

Mid-Term (6–12 months): Accumulate leaders on corrections if deal momentum and margin trajectory hold. Blend large-cap stability with select mid-cap ER&D/Cloud names for alpha.

Long-Term (3–5 years): Core allocation to scale franchises with strong client mining, cash generation, and AI/Cloud execution. Watch for durable margin bands, attrition normalisation, and productised revenue growth.

Key Technical Levels – Nifty IT Index

Time Frame	Critical Support Levels	Critical Resistance Levels
Short-Term (1–3 M)	33,800 / 33,100	35,200 / 35,900
Mid-Term (6–12 M)	32,600 / 31,900	36,800 / 37,500
Long-Term (3–5 Y)	30,800 / 29,900	38,700 / 39,800

Upcoming Important Events (Next 3 Months – IT)

• Sep–Nov 2025: Q2 FY26 earnings season for IT services (deal TCV, margin outlook, AI-led programs).
• Monthly: US CPI/PCE, jobs data, and ISM prints (demand sentiment for client budgets).
• Quarterly: Wage-hike/attrition cycles and campus intake updates; onsite/offshore mix commentary.
• Ongoing: Global AI/data privacy regulatory updates impacting large deals and data residency.

Monthly: USD/INR moves influencing translation gains/losses and competitiveness.

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