MSCI cuts HCL Tech's weightage; stock trades as top loser on Sensex, Nifty

Shares of HCL Technologies slipped 3.3 per cent to Rs 1,108.55 on the BSE in Friday's intra-day trade on profit booking as the weightage of the information technology (IT) firm has been reduced by 0.2 basis points in the MSCI index. The changes come into effect on March 1, 2023.

At 01:51 pm, HCL Technologies was trading 3 per cent lower at Rs 1,110.95 on the BSE. The stock was the top loser among Nifty 50 and S&P BSE Sensex stocks. The benchmarks, meanwhile, were down about 0.30 per cent each.

According to Nuvama Alternative & Quantitative Research, the proforma weightage of the HCL Tech in the index is 1.5 per cent and the weightage reduction is of 0.2 basis points which will result in the selling of seven million shares and an outflow of about $97 million.

However, despite today's fall, HCL Technologies has outperformed the market by surging 17 per cent in the past six months, as against 3 per cent rise in the benchmark indices. In comparison, its peers, Tata Consultancy Services (TCS) and Infosys are up 10 per cent and 7 per cent, respectively. Wipro, Tech Mahindra, and LTI Mindtree, on the contrary, were down in the range of 3 per cent to 6 per cent.

Analysts at ICICI Securities have a 'buy' rating on HCL Technologies with a 12-month target price of Rs 1,220 per share.

"The company continues to win multi-year deals in Cloud transformation, cyber security, etc, as new deal bookings continue to be strong. Revenue guidance of 13.5-14 per cent revenue growth in CC for FY23 at the company level & IT services guidance of 16-16.5 per cent provide visibility for steady growth. The revival of P&P business is critical as it is a high margin business. With improvement in large deal wins, vendor consolidation opportunity, expansion in geographies, investment in sales & capabilities, we expect HCL Technologies to register 12.3 per cent CAGR in revenues over FY22-25," the brokerage firm said in its Q3FY23 result update.