Global Investors Buy $1.7 Billion Worth Indian Tech Stocks In Last Two Months Ahead Of Q3 Earnings

Global investors have mopped up $1.7 billion worth of Indian technology stocks in the last two months of 2024 as the tech giants gear up to post their third-quarter earnings.

Foreign institutional investors bought IT stocks worth $1 billion in December after having mopped up $653 million in the preceding month, according to the data from National Securities Depository Ltd. The inflows come after the overseas investors heavily sold tech shares at the beginning of 2024.

Among the sectoral inflows, information technology stocks witnessed the highest inflows among foreign investors in the last two months of 2024. Meanwhile, domestic oil and gas stocks saw outflows worth $5.4 billion from global funds in the last three months of 2024.

Tech bellwethers are set to report their December quarter results, with Tata Consultancy Services Ltd. scheduled to kick off the earnings season on Jan 9.

In a seasonally weak quarter, the IT sector's growth is expected to be weighed down by furloughs. While rupee depreciation could have provided some relief, margins are expected to remain flattish.

The aggregate revenue growth in the third quarter is expected to moderate slightly to 0.7% sequentially in constant currency terms, given usual seasonality, according to Jefferies and DAM Capital Advisors.

Margins are expected to remain flattish in the third quarter, according to Emkay Global Financial Services Ltd.

Companies are expected to report a mixed performance on margins, the research firm said. Companies that have implemented wage hikes, such as Wipro, LTIMindtree, and BirlaSoft, are likely to report a decline in margins, the brokerage firm said, adding that for Tier-1 companies, margins are anticipated to fluctuate by negative 140 basis points to positive 100 basis points. For mid-cap companies, we expect margins to vary between negative 160 basis points and positive 60 basis points quarter-on-quarter, it said.

Foreign institutions have been net sellers of $1.1 billion crore worth of Indian equities in January so far, according to data from the National Securities Depository Ltd. In 2024, foreign funds bought stocks worth $124 million, net of primary and secondary market.